Fiera Capital Inc. and Fiera Private Wealth Income Fund

Headnote

NP 11-203 -- Relief from mutual fund self-dealing investment restrictions -- restriction prohibiting a mutual fund from knowingly making an investment in any person or company in which the mutual fund, alone or together with one or more related mutual funds, is a "substantial security holder" -- restriction prohibiting a mutual fund from knowingly making an investment in an issuer in which any officer, director or substantial security holder of a mutual fund, its management company or its distribution company has a "significant interest" -- Relief granted subject to certain conditions.

Applicable Legislative Provisions

Securities Act (Ontario), R.S.O. 1990, c. S.5, as am., ss. 111(2)(b), 111(2)(c), 113.

July 28, 2009

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

FIERA CAPITAL INC.

(the Filer)

AND

FIERA PRIVATE WEALTH INCOME FUND

(the Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Fund and other mutual funds as may be established and managed by the Filer from time to time (the Fiera Funds) for a decision, under the securities legislation of the Jurisdiction of the principal regulator (the Legislation), exempting the Fiera Funds from:

(a) the investment restriction contained in the Legislation, which prohibits a mutual fund knowingly making or holding an investment in a person or company in which the mutual fund, alone or together with one or more related mutual funds, is a substantial security holder;

(b) the investment restriction contained in the Legislation, which prohibits a mutual fund from knowingly making or holding an investment in an issuer in which,

(i) any officer or director of the mutual fund, its management company or distribution company or an associate of any of them, or

(ii) any person or company who is a substantial security holder of the mutual fund, its management company or its distribution company,

has a significant interest; and

(c) the investment restriction contained in the Legislation, which prohibits a mutual fund or its management company or its distribution company to knowingly hold an investment described in (a) or (b) above.

(collectively, the Exemption 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 section 4.7(1) of Multilateral Instrument 11-202 Passport System ("MI 11-202") is intended to be relied upon in Alberta.

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.

Centria LPs means each of Centria Capital Construction Fund LP, Centria Capital Development Fund LP and Centria Capital Start-Up Fund LP, each a limited partnership managed by Centria Capital Management Inc. and any other limited partnership managed by Centria Capital Management Inc.;

Diversified Lending Fund means Fiera Diversified Lending Fund;

NI 45-106 means National Instrument 45-106 Prospectus and Registration Exemptions; and

Private Wealth Trust Agreement means the amended and restated master trust agreement governing the Fund dated October 31, 2007.

Representations

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

The Filer

1. The Filer is a corporation formed under the laws of Canada with its head office in Montreal, Quebec.

2. The Filer is registered as an adviser in the categories of investment counsel and portfolio manager (or equivalent) in all provinces of Canada, is registered as a limited market dealer and commodity trading manager in Ontario and is registered as a limited market dealer in Newfoundland and Labrador.

The Funds

3. The Fund is an open-ended trust established on November 29, 2006 under the laws of the Province of Ontario and governed by the Private Wealth Trust Agreement.

4. RBC Dexia Investor Services Trust acts as a trustee of the Fund and the Filer acts as the manager and portfolio manager of the Fund pursuant to the Private Wealth Trust Agreement.

5. The Fund has an investment objective of achieving a high level of income and modest capital appreciation primarily through investment in a diversified portfolio of income producing assets. To achieve its investment objectives, the Fund allocates its portfolio among various types of investment classes including an allocation of up to 30% to mortgages, loans, infrastructure and private placements.

6. The Fund is not in default under the Legislation.

7. The Diversified Lending Fund is an open-ended trust established on March 28, 2008 under the laws of the Province of Quebec, by the seventeenth supplemental trust agreement to the master trust agreement dated June 21, 2004 (the "Diversified Lending Trust Agreement").

8. Desjardins Trust Inc. acts as a trustee of the Diversified Lending Fund and the Filer acts as the manager and portfolio manager of the Diversified Lending Fund pursuant to the Diversified Lending Trust Agreement.

9. The Diversified Lending Fund has an investment objective that requires it to invest mainly in the Centria LPs in such combinations as the Filer will determine in its absolute discretion from time to time.

The Centria LPs

10. Currently, there are three Centria LPs but in the future additional limited partnerships may be created by Centria Capital Management Inc. The Centria LPs are each open-end Quebec limited partnerships which provide interim financing to general contractors and developers. Centria Capital Management Inc. is the manager of the Centria LPs pursuant to an administrative agreement with each general partner of each Centria LP.

11. Each of the general partners to the Centria LPs, Centria Capital Management Inc. (the manager of the Centria LPs) and the Filer is directly or indirectly controlled by DJM Capital Inc., a private investment company indirectly controlled by Jean-Guy Desjardins and Jean C. Monty.

12. Jean-Guy Desjardins indirectly owns 41.9% of the Filer and Jean C. Monty indirectly owns 10.5% of the Filer. Accordingly, Jean-Guy Desjardins is a "substantial security holder" (as those words are defined in the Legislation) of the Filer.

13. In addition, Jean-Guy Desjardins is an officer and director of the Filer.

14. In addition, Jean-Guy Desjardins beneficially owns, indirectly, 7% of the units of one of the Centria LPs. In the future, it is possible that Jean-Guy Desjardins or another officer or director of the Filer may own more than 10% of the units of a Centria LP, which would amount to a "significant interest" (as those words are defined in the Legislation) in the Centria LPs.

The Funds' Investment in the Centria LPs

15. As a result of its investment objective of investing mainly in the Centria LPs, the Diversified Lending Fund currently owns and may continue to own more than 20% of the outstanding units of each of the Centria LPs.

16. It is now proposed that the Fund will invest a portion of its assets in the Centria LPs. It is expected that the Fund may own more than 20% of the outstanding units of one or more Centria LPs.

17. The amount invested in a Centria LP by the Fund together with the amount invested by the Diversified Lending Fund is likely to exceed 20% of the outstanding units of each Centria LP.

18. As a result, it is expected that the Fiera Funds will be substantial security holders (as those words are defined in the Legislation) of each Centria LP, either together or alone, as they may hold more than 20% of the outstanding units of a Centria LP.

19. The Fiera Funds are or will be sold in Canada to investors on a continuous basis pursuant to available exemptions from the prospectus and dealer registration requirements in accordance with NI 45-106.

20. The Funds are not and will not be reporting issuers in the Jurisdiction.

21. Offering memoranda are not produced for all Fiera Funds as certain of these funds are sold only to managed account clients. Where an offering memorandum is produced in respect of a Fiera Fund, it will be available to investors of that Fiera Fund.

22. Unitholders of the Fiera Funds will have access to copies of the Fiera Funds' interim financial statements and audited annual financial statements which will include disclosure of the Centria LPs' investments.

23. The arrangements between or in respect of each of the Fiera Funds and the Centria LPs are such as to avoid the duplication of management fees and incentive fees. Each Centria LP pays Centria Capital Management Inc. a management fee. The Fiera Funds do not pay the Filer a management fee; instead, each client directly pays the Filer a fee based upon the assets under administration.

24. In the absence of the Exemption Sought, the Fiera Funds would be precluded from purchasing or holding units of the Centria LPs due to the investment restrictions contained in the Legislation.

25. The investments by the Fiera Funds in units of the Centria LPs are or will represent the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Fiera Funds.

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 Exemption Sought is granted provided that:

(a) the securities of the Fiera Funds are distributed in Canada only pursuant to exemptions from the prospectus requirements in accordance with NI 45-106;

(b) no management or incentive fees are payable by the Fiera Funds that, to a reasonable person, would duplicate a fee payable by the Centria LPs for the same service;

(c) no sales or redemption fees are payable by the Fiera Funds in relation to its purchase or redemptions of units of the Centria LPs that, to a reasonable person, would duplicate a fee payable by an investor in the Fiera Funds;

(d) the Fiera Funds do not vote the units of the Centria LPs that are held by the Fiera Funds, unless the Fiera Funds are the sole owner of Centria LP units at the time of the meeting or effective date of the written resolution; and

(e) the offering memorandum of the Fiera Funds (if any) will disclose:

(i) that the Fiera Funds may purchase units of the Centria LPs; and

(ii) the approximate or maximum percentage of the net assets of the Fiera Funds that is dedicated to the investment in units of the Centria LPs.