Innocap Investment Management Inc.

Decision

Headnote

Firm with two co-Chief Executive Officers (Co-CEOs), neither of whom having the authority to overrule a decision made by either individual and both exercising supervisory responsibility over compliance matters, exempted from requirement in section 11.2 of National Instrument 31-103 Registration Requirements and Exemptions to designate an individual to be the Ultimate Designated Person (UDP) -- Firm authorized to designate two UDPs for so long as they keep two individuals designated as Co-CEOs.

Instruments Cited

National Instrument 31-103 Registration Requirements and Exemptions, s. 11.2.

August 24, 2010

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

INNOCAP INVESTMENT MANAGEMENT INC.

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption for the Filer from the requirement contained in section 11.2 of National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103) to designate an individual to be the ultimate designated person (UDP) and instead be permitted to designate and register two individuals as UDP (the Exemption Sought).

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

a) the Autorité des marchés financiers is the principal regulator for this application;

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 Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island and Saskatchewan (the Non-principal Jurisdictions, or together with the Jurisdictions, the Filing Jurisdictions), 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

This decision is based on the following facts represented by the Filer:

1. The Filer has its head office in Quebec.

2. The Filer is registered under the Legislation in the category of portfolio manager and exempt market dealer and in the category of investment fund manager in Quebec.

3. The Filer is also registered as a portfolio manager and an exempt market dealer in each of the Non-Principal Jurisdictions.

4. The Filer is not, to the best of its knowledge, in default of any requirements of securities legislation in any of the Filing Jurisdictions.

5. The Filer has appointed two individuals as Chief Executive Officer (or "co-CEO") in 2007 who have equivalent authority. As co-CEO, they both supervise the firm activities and determine its orientations. This organizational structure is helpful for them to be able to devote the required time to their function as co-CEO while remaining sufficiently involved in the day-to-day business activities of the firm to fulfill their portfolio management supervision.

6. The co-CEOs are both responsible for the same sectors and activities. They jointly manage the budget as well as all human resource-related matters. They both exercise supervisory responsibility over compliance matters. The Chief Compliance Officer reports all compliance matters to either co-CEOs since they both promote the compliance program, within the firm and with respect to regulatory authorities. Both of them may directly access, report and be required to take action by or to the Board of Directors. They jointly submit a quarterly report to the firms' Board of Directors for the purpose of assessing the business activities compared with the business plan and strategic orientation.

7. The co-CEOs are both required to report to National Bank Financial Group's Management Committee. Given the co-CEOs' joint responsibility with respect to the firm, the reporting obligations apply to both individuals, equally and without distinction. There is no line of reporting between them and no other executive officers. Neither of the co-CEOs has the authority to overrule a decision made by either individual or both of them. If a conflict arises, they consult each other to reach a consensus. If they are unable to obtain a consensus, their immediate superior, which is the same individual, would settle. Decision-making power, accountability and the determination of orientations are all evenly distributed in a fair and equitable manner.

This decision is also based on the following facts represented by the Filer:

UDP Requirement

1. NI 31-103 was implemented on September 28, 2009 (the Implementation Date).

2. Under paragraph 11.2(a) of NI 31-103, a registered firm is required to designate an individual to be the UDP (the UDP Requirement) and the UDP must be the CEO or equivalent of the registered firm.

3. Under section 16.8 of NI 31-103, there is a 3-month transition period from the Implementation Date for a registered firm to comply with the UDP Requirement.

4. Prior to the implementation of NI 31-103, there was a requirement under the Securities Act (Ontario) for an adviser to designate an individual, and have him or her registered, as the Ultimately Responsible Person (URP).

5. The URP has to be an executive officer who was a member of the senior management of the adviser and satisfies the criteria set out in Section 3.2 of the Rule 31-502 -- Proficiency Requirements for Registrants.

6. Prior to the implementation of NI 31-103, the Filer has an individual in the position of URP for a number of years who was not one of the co-CEO.

7. Designating only one UDP for the purpose of satisfying the requirement would not adequately reflect the sharing of powers and authority between the two individuals acting as co-CEO and the organizational structure of the firm.

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 the Filer:

i) keeps two individuals designated as co-CEO.

"Mario Albert"
Superintendent, Client Services, Compensation and Distribution