Manulife Asset Management Limited and the Standard Life Mutual Funds
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval granted for change of custodian.
Applicable Legislative Provisions
National Instrument 81-102 Investment Funds, ss. 5.5(1)(c), 5.7(1)(c) and Part 6.
September 21, 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 MANULIFE ASSET MANAGEMENT LIMITED (the Filer) AND IN THE MATTER OF THE STANDARD LIFE MUTUAL FUNDS (as defined below)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for approval of the change of custodian of certain mutual funds managed by the Filer and listed in Schedule A (the Standard Life Mutual Funds) from Standard Life Trust Company to RBC Investor Services Trust under section 5.5(1)(c) of National Instrument 81-102 -- Investment Funds (NI 81-102) (the Approval Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) the Filer has 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, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, and Northwest Territories.
Interpretation
Terms defined in National Instrument 14-101 -- Definitions, MI 11-102 and NI 81-102 have the same meaning if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filer:
The Filer and the Standard Life Mutual Funds
1. The Filer, an indirect wholly owned subsidiary of The Manufacturers Life Insurance Company (Manulife), is a corporation amalgamated under the laws of Canada with its head office located at 200 Bloor Street East, North Tower, Toronto, Ontario M4W 1E5.
2. The Filer is duly registered as a portfolio manager in all Canadian Provinces and Territories; as an investment fund manager in Québec, Ontario and Newfoundland and Labrador; as a commodity trading manager in Ontario; and as a derivatives portfolio manager in Québec.
3. As previously announced, following the indirect acquisition of control of Standard Life Mutual Funds Ltd. by Manulife on January 30, 2015 and in furtherance of the amalgamation of Standard Life Mutual Funds Ltd. and Manulife Asset Management Accord (2015) Inc. (previously Standard Life Investments Inc.) into the Filer effective as of July 1, 2015 (the Change of Manager), the Filer now serves as the investment fund manager and primary portfolio manager of the Standard Life Mutual Funds with the exception of those funds managed by Beutel, Goodman & Company Ltd. and Guardian Capital LP.
4. The Standard Life Mutual Funds are comprised of 34 trust funds (the Standard Life Trust Funds) and 23 corporate class funds (the Standard Life Corporate Class Funds) as listed in Schedule A.
5. The Standard Life Trust Funds are open-ended funds established under an amended and restated master declaration of trust dated July 1, 2015. Since July 1, 2015 the Filer has been the trustee of the Standard Life Trust Funds.
6. The Standard Life Corporate Class Funds are share classes of Standard Life Corporate Class Inc., a mutual fund corporation incorporated under the laws of Canada.
7. The Standard Life Mutual Funds are reporting issuers in the Jurisdiction and in all other provinces and territories of Canada, other than Nunavut.
8. The securities of each of the Standard Life Mutual Funds are qualified for distribution in the Jurisdiction and in all other provinces and territories of Canada, other than Nunavut, under a simplified prospectus, annual information form and fund facts documents pursuant to National Instrument 81-101 -- Mutual Fund Prospectus Disclosure.
9. The Standard Life Mutual Funds are subject to the provisions of NI 81-102, National Instrument 81-106 -- Investment Fund Continuous Disclosure (NI 81-106) and National Instrument 81-107 -- Independent Review Committee for Investment Funds.
10. The Filer is also the investment fund manager and portfolio manager for a group of mutual funds domiciled in Canada that are subject to NI 81-102 (the Manulife Mutual Funds), a group of mutual funds domiciled in Canada that are not subject to NI 81-102 and most Manulife closed-end funds.
11. None of the Filer, the Standard Life Mutual Funds nor the Manulife Mutual Funds are in default of applicable securities legislation in the Jurisdiction or in any other provinces and territories of Canada in which they are reporting issuers.
The Change of Custodian
12. The Filer intends to change the custodian of the Standard Life Mutual Funds (the Change of Custodian). The Change of Custodian may be considered to be implemented in connection with the Change of Manager and therefore approval of the Regulators under section 5.5(1)(c) is required.
13. Manulife believes the Change of Custodian will be beneficial to the Standard Life Mutual Funds and their securityholders as it will reduce the custody fees for each of the Standard Life Mutual Funds and create administrative efficiencies by having custody of all the mutual funds managed by the Filer with the same custodian.
14. The current custodian of the Standard Life Mutual Funds is the Standard Life Trust Company. The sub-custodians of the Standard Life Mutual Funds are RBC Investor Services Trust (RBC IS) and Citibank N.A., London Branch.
15. The custodian of each Standard Life Mutual Fund will be changed to RBC IS. RBC IS may engage sub-custodians in connection with the assets of the Standard Life Mutual Funds. The Filer is not an affiliate of RBC IS.
16. RBC IS is the custodian of the Manulife Mutual Funds and meets the requirements of Part 6 of NI 81-102.
17. The Standard Life Trust Company last filed a custodian report in relation to the Standard Life Mutual Funds on April 28, 2015, RBC IS last filed a custodian report in relation to the Manulife Mutual Funds on March 31, 2015 for the Manulife trust funds and August 10, 2015 for the Manulife corporate class funds and these custodian reports were provided to the Filer.
18. The Change of Custodian and the custodial agreements and arrangements between the Standard Life Mutual Funds and RBC IS will be implemented in compliance with Part 6 of NI 81-102.
19. The Filer believes that adding the Standard Life Mutual Funds to the existing custodial arrangements between the Manulife Mutual Funds and RBC IS will have no adverse impact on continued compliance with Part 6 of NI 81-102.
20. The Filer believes that the Change of Custodian will have no adverse impact on continued compliance with Part 6 of NI 81-102.
21. The Filer does not regard the Change of Custodian as either a "material change" as defined in Section 1.1 of NI 81-106 -- Investment Fund Continuous Disclosure, or as a "conflict of interest matter" as defined in Section 1.2 of NI 81-107 -- Independent Review Committee for Investment Funds.
22. Details of the Change of Custodian will be set out in the final renewal simplified prospectus and annual information form of the Standard Life Mutual Funds which the Filer is expecting to file on or about November 9, 2015.
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 the Approval Sought is granted.
SCHEDULE A
STANDARD LIFE MUTUAL FUNDS
1. Standard Life Trust Funds
2. Standard Life Corporate Class Funds
{*} These funds will be closed effective on or about September 25, 2015.