Fiera Capital Corporation and the Investment Funds listed in Schedule A et al.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from s. 13.5(2)(a) of NI 31-103 to permit the registered adviser, acting on behalf of the funds managed by it, to purchase securities of related issuers.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements and Exemptions, ss. 13.5(2)(a), 15.1.

May 1, 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

FIERA CAPITAL CORPORATION

AND

IN THE MATTER OF

THE INVESTMENT FUNDS LISTED IN SCHEDULE A

AND ANY INVESTMENT FUNDS THAT MAY BE

ESTABLISHED IN THE FUTURE FOR WHICH THE

FILER ACTS AS MANAGER AND/OR ADVISER

(the Funds)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer on behalf of:

(a) existing investment funds and future investment funds of which the Filer is the manager and/or the adviser and to which Regulation 81-102 Mutual Funds (Regulation 81-102) applies (each a Mutual Fund and collectively the Mutual Funds);

(b) existing investment funds and future investment funds of which the Filer is the manager and/or adviser and to which Regulation 81-107 respecting Independent Review Committee for Investment Funds (Regulation 81-107), but not Regulation 81-102, applies (each a Regulation 81-107 Fund and collectively, the Regulation 81-107 Funds); and

(c) existing mutual funds and future mutual funds of which the Filer is the manager or adviser and to which Regulation 81-102 does not apply (each, a Pooled Fund and collectively, the Pooled Funds);

(the Mutual Funds, the Regulation 81-107 Funds and the Pooled Funds are collectively referred to as the Funds) for a decision under the securities legislation of the Jurisdictions (Legislation) for an exemption from the provision of section 13.5(2)(a) of Regulation 31-l03 Registration Requirements, Exemptions and Ongoing Registrant Obligations (Regulation 31-103) prohibiting a Fund from making an investment in any issuer in which a responsible person or an associate of a responsible person is a partner, officer or director (Related Issuer) unless this fact is disclosed to the client and the written consent of the client is obtained before the investment is made (Requested Relief).

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 the application herein;

(b) the Filer has provided notice that section 4.7(1) of Regulation 11-102 Passport System (Regulation 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut; 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 Regulation 11-102, Regulation 14-101 respecting Definitions, Regulation 81-102 or Regulation 81-107 and Regulation 31-103 have the same respective meanings if used in this decision, unless otherwise defined herein.

Representations

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

The Filer

1. The Filer is a corporation subsisting under the laws of Ontario with its head office located in Montréal, Québec and its registered office located in Toronto, Ontario.

2. The Filer is registered in:

(a) Québec as investment fund manager, exempt market dealer, portfolio manager and derivatives portfolio manager;

(b) Ontario as investment fund manager, exempt market dealer, portfolio manager and commodity trading manager;

(c) each of the other provinces and territories of Canada as exempt market dealer and portfolio manager; and

(d) Manitoba as adviser pursuant to the Futures Commodity Act (Manitoba).

3. The Filer is a reporting issuer in all Canadian provinces and territories and its securities are listed and posted for trading on the TSX under the symbol "FSZ".

The Acquisition

4. On February 24, 2012, the Filer entered into an asset purchase agreement (Acquisition Agreement) with National Bank of Canada (National Bank) and Natcan Investment Management Inc. (Natcan), an indirect wholly-owned subsidiary of National Bank, pursuant to which, subject to the terms and conditions set forth in the Acquisition Agreement, the Filer will acquire substantially all of the business assets of Natcan (Acquisition). The purchase price for the Acquisition will be paid, in part, by the Filer issuing class A subordinate voting shares (Class A Shares) to Natcan, representing 35% of the issued and outstanding voting securities of the Filer following completion of the Acquisition, along with two options to increase its stake to 40%.

5. Considering that further to the Acquisition, Fiera is being acquired and is not acquiring any interest in any company related to Natcan, upon completion of the Acquisition, Fiera will not have any new associate or affiliate.

6. Upon completion of the Acquisition, on April 2, 2012 (Closing), the Filer changed its name to Fiera Capital Corporation.

7. In addition and according to the terms of the Acquisition Agreement, National Bank will have the right to appoint two directors on the board of directors of the Filer. Upon completion of the Acquisition, Messrs. Luc Paiement and Louis Vachon will be appointed as directors of the Filer.

National Bank

8. Mr. Louis Vachon currently acts as Director, President and Chief Executive Officer of National Bank and Mr. Luc Paiement currently acts as Executive Vice-President -- Wealth Management, National Bank.

9. The Filer and the Funds currently deal at arm's length with National Bank and National Bank's affiliates. The Filer expects that, following completion of the Acquisition, the Filer and the Funds will continue to deal at arm's length with National Bank and its affiliates. However, completion of the Acquisition will result in the creation of a new Related Issuer.

10. National Bank is a Canadian chartered bank. The common shares of National Bank currently are listed and posted for trading on the TSX under the trading symbol "NA".

11. National Bank regularly issues listed and non-listed debt securities as well as rated and non-rated debt securities.

12. Upon completion of the Acquisition, Desjardins société financière inc. (DSF), an indirect wholly-owned subsidiary of Fédération des caisses Desjardins du Québec (Desjardins) will own class B special voting shares of the Filer, representing approximately 11% of all issued and outstanding shares of the Filer. In addition, Desjardins is a Related Issuer of the Filer as it has the right to appoint two directors on the board of directors of the Filer.

13. The Filer intends to obtain the approval of the IRC of each of the Mutual Funds and NI 81-107 Funds in order to, amongst other things, invest in securities of National Bank, the whole in accordance with the requirements of Regulation 81-107.

The Funds

14. Each of the Funds is or will be a mutual fund established under the laws of Québec or Ontario or one of the other Passport Jurisdictions.

15. The Filer or an affiliate of the Filer will act as the manager and/or adviser of each Future Mutual Funds, Future NI 81-107 or Future Pooled Fund.

16. Each Mutual Fund and NI 81-107 Fund is, or will be, a reporting issuer under the securities legislation of one or more Jurisdictions.

17. The Pooled Funds are or will be offered for sale on an exempt basis pursuant to available prospectus exemptions from the prospectus requirements in one or more of the Jurisdictions. None of the Pooled Funds are or will be a reporting issuer in any Jurisdictions.

18. Each of the Funds that will rely on the Requested Relief has or will have an investment objective that would permit investments in securities of financial services issuers such as National Bank.

19. The Filer and the Funds are not in default of securities legislation in any Jurisdiction.

IRC

20. Each of the Mutual Funds and NI 81-107 Funds has an independent review committee (IRC) appointed in a manner consistent with the requirements of Regulation 81-107.

21. Each of the Pooled Funds has or will have an IRC appointed in a manner consistent with the requirements of Regulation 81-107 as if Regulation 81-107 applied to the Pooled Funds.

22. As of April 14, 2011, the Canadian Securities Authorities (CSA) granted a relief from section 4.2(1) of Regulation 81-102 authorizing the Filer when acting on behalf of Mutual Funds to enter into inter-fund trades with Pooled Funds or NI 81-107 Funds. In addition, as of February 1, 2011, the CSA issued a relief from section 13.5 (2)(b) of Regulation 31-101 to authorize the Filer when acting as manager or adviser of the Funds or the managed accounts for which the Filer acts as portfolio adviser to enter into inter-fund trades (the decisions are collectively referred to as theInter-Fund Trading Decisions).

23. The Filer follows the conditions and procedures contained in the Inter-Fund Trading Decisions when it enters into inter-fund trades on behalf of the Funds.

Regulatory Restriction to invest in securities of Related Issuer

24. According to section 13.5(2)(a) of Regulation 31-103, a registered adviser must not cause an investment portfolio managed by it, including an investment fund for which it acts as adviser to purchase a security of a Related Issuer unless this fact is disclosed to its client and the written consent of the client is obtained before the purchase (Section 13.5(2)(a) Regulation 31-103 Restriction). Policy Statement to Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registration Obligations (PS 31-103) provides that when the client is an investment fund, the disclosure should be provided to and the consent obtained from, each security holder of the investment fund in order to be meaningful.

25. Section 6.2 of Regulation 81-107 provides the Mutual Funds with an exemption from the Section 13.5(2)(a) Regulation 31-103 Restriction in respect of purchasing exchange-traded securities, such as common shares, in the secondary market if the Mutual Fund's IRC has approved the investment under Section 5.2(2) of Regulation 81-107. It does not permit the Mutual Funds to purchase not listed and traded securities of Related Issuers, such as debt securities (NET Debt Securities).

26. Regulation 81-107 does not apply to the Pooled Funds as they are not reporting issuers.

27. Should the Pooled Funds be governed by Regulation 81-107, the Requested Relief with respect to the purchase of listed securities would not be necessary as they could have been exempted from the restriction provided for in Section 13.5(2)(a) of Regulation 31-103 by having their IRC approve their investment in listed securities of Related Issuers.

28. Accordingly, in the absence of the Requested Relief, the Filer may not cause the Pooled Funds to purchase securities of Related Issuers or cause the Mutual Funds or the NI 81-107 Funds to purchase NET Debt Securities, as it is practically impossible to obtain the consent of all security holders of all such Funds in situation where issuers become Related Issuers after a person has become a security holder of a Fund.

29. The Filer has determined that it would be in the best interests of the Funds to receive the Requested Relief.

30. Certain Related Issuers of the Filer are significant issuers of securities and they are issuers of debt instruments. The Filer considers that the Funds should have access to such securities for the following reasons:

(a) there is a limited supply of highly rated corporate debt;

(b) diversification is reduced to the extent that a Fund is limited with respect to investment opportunities; and

(c) to the extent that a Fund seeks to track or outperform a benchmark, it is important for the Fund to be able to purchase any securities included in the benchmark. NET Debt Securities of Related Issuers may be included in such Canadian debt indices.

31. Where the NET Debt Security is purchased by a Fund in a primary distribution or treasury offering (Primary Offering) pursuant to the Requested Relief:

(i) the debt security, other than an asset backed commercial paper security, will have a term to maturity of 365 days or more and will be issued by a Related Issuer that has been given and continues to have, at the time of purchase, an "approved credit rating" by an approved credit rating organization; and

(ii) the terms of the Primary Offering, such as the size and the pricing, will be a matter of public record as evidenced in a prospectus, offering memorandum, press release or other public document.

32. Where the NET Debt Security is purchased by a Fund in the secondary market pursuant to the Requested Relief and not in a Primary Offering, the debt security has been given and continues to have, at the time of purchase, an "approved credit rating" by an approved credit rating organization.

Decision

Each of the Decision Maker is satisfied that the decision meets the relevant test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Maker under the Legislation is that the Requested Relief is granted to permit the Filer to purchase exchange-traded securities of Related Issuers on behalf of the Pooled Funds provided that:

(a) the investment is made in accordance with or is necessary to meet the Pooled Fund's investment objective;

(b) the Pooled Funds maintain an IRC that is composed in manner consistent with section 3.7 of Regulation 81-107 and conducts itself in a manner that complies with the standard of care set out in section 3.9 of Regulation 81-107 as if Regulation 81-107 applied to the Pooled Fund;

(c) at the time of the purchase the IRC of the Fund has approved the transaction in accordance with Section 5.2(2) of NI 81-107;

(d) the Filer complies with section 5.1 of Regulation 81-107, and the Filer and the IRC of the Pooled Funds will comply with section 5.4 of Regulation 81-107 for any standing instructions the IRC provides in connection with the purchase of securities of a Related Issuer;

(e) the Filer acting on behalf of a Pooled Fund purchases the securities of a Related Issuer on a stock exchange on which such securities are listed and traded;

(f) on or before the 90th day after the end of each financial year of a Pooled Fund, the Filer files with the applicable securities regulatory authorities or regulator the particulars of any such investments;

(g) in connection with any instance that the IRC of a Pooled Fund becomes aware that the Pooled Fund has not complied with the conditions of the Requested Relief, the IRC of the Pooled Fund complies with the reporting obligation in section 4.5 of Regulation 81-107 as if Regulation 81-107 applied to the Pooled Fund; and

(h) the decision with respect to purchases of exchange-traded securities by the Pooled Funds will expire on the coming into force of any securities legislation relating to purchases of exchange-traded securities by mutual funds not governed by Regulation 81-102.

The decision of the Decision Maker under the Legislation is that the Requested Relief is granted to permit the Filer to purchase NET Debt Securities on behalf of the Funds provided that:

(a) the investment is made in accordance with, or is necessary to meet, the investment objective of the Fund;

(b) at the time of the purchase the IRC of the Fund has approved the transaction in accordance with Section 5.2(2) of Regulation 81-107;

(c) the Pooled Funds maintain an IRC that is composed in manner consistent with section 3.7 of Regulation 81-107 and conducts itself in a manner that complies with the standard of care set out in section 3.9 of Regulation 81-107 as if Regulation 81-107 applied to the Pooled Fund;

(d) the manager of the Fund complies with section 5.1 of Regulation 81-107 and the manager and the IRC of the Fund comply with section 5.4 of Regulation 81-107 for any standing instructions the IRC provides in connection with the transactions;

(e) in the case of NET Debt Securities to be purchased in a Primary Offering:

(i) the size of the Primary Offering is at least $100 million;

(ii) at least two purchasers who are independent, arm's length purchasers, which may include "independent underwriters" within the meaning of Regulation 33-105 Underwriting Conflicts, collectively purchase at least 20% of the Primary Offering;

(iii) no Fund shall participate in the Primary Offering if following its purchase the Fund together with related Funds will hold more than 20% of the securities issued in the Primary Offering;

(iv) no Fund shall participate in the Primary Offering if following its purchase the Fund would have more than 5% of its net assets invested in NET Debt Securities of a Related Issuer;

(v) the price paid for the securities by a Fund in the Primary Offering shall be no higher than the lowest price paid by any of the arm's length purchasers who participate in the Primary Offering;

(f) in the case of NET Debt Securities to be purchased in the secondary market:

(i) the security has been given and continues, at the time of the purchase, to have an "approved credit rating" by an "approved credit rating organization" within the meaning of those terms in Regulation 81-102;

(ii) the price payable for the security is not more than the ask price of the security;

(iii) the ask price of the security is determined as follows:

(A) if the purchase occurs on a marketplace, the price payable is determined in accordance with the requirements of that marketplace; or

(B) if the purchase does not occur on a marketplace,

(1) the Fund may pay the price for the security at which an independent, arm's length seller is willing to sell the security, or

(2) if the Fund does not purchase the security from an independent, arm's length seller, the Fund must pay the price quoted publicly by an independent marketplace or obtain, immediately before the purchase, at least one quote from an independent, arm's length purchaser or seller and not pay more than that quote;

(iv) the transaction complies with any applicable "market integrity requirements" as defined in Regulation 81-107;

(g) any inter fund trade between the Funds involving the purchase of NET Debt Securities will be concluded in accordance with section 6.1(2) of Regulation 81-107;

(h) no later than the time a Mutual Fund or a NI 81-107 Fund files its annual financial statements, or on or before the 90th day after the end of each financial year of a Pooled Fund, the Filer files with the securities regulatory authority or regulator the particulars of any investments made in reliance on this relief;

(i) the IRC of the Fund complies with section 4.5 of Regulation 81-107 in connection with any instance that it becomes aware that the Filer did not comply with any of the conditions of this decision; and

(j) the decision with respect to NET Debt Securities purchased pursuant to a Primary Offering or in the secondary market will expire on the coming into force of any securities legislation relating to fund purchases of NET Debt Securities purchased pursuant to a Primary Offering or in the secondary market.

"Patrick Déry"
Superintendent, Client Services, Compensation and Distribution

 

APPENDIX "A"

CURRENT FUNDS

Mutual Funds

Fiera Sceptre Balanced Fund
Fiera Sceptre Bond Fund
Fiera Sceptre High Income Fund
Fiera Sceptre Canadian Equity Fund
Fiera Sceptre Equity Growth Fund
Fiera Sceptre Global Equity Fund
Fiera Sceptre Money Market Fund
Fiera Sceptre Large Cap Canadian Equity Fund
Fiera Sceptre Core Canadian Equity Fund
Fiera Sceptre U.S. Equity Fund
Fiera Sceptre Tactical Bond Yield Fund

The Natcan QSSP II Investment Fund Inc (the unitholders of this investment fund are invited to vote for or against the proposed change of the investment fund manager rom Natcan to the Filer on April 18, 2012)

NI 81-107 Funds

Fiera High Income Trust
Fiera Sceptre Tactical Bond Fund

Pooled Funds established under Quebec Laws

Fiera US Equity Fund
Fiera Canadian Bond Fund -- Ethical
Fiera International Equity Fund
Fiera Money Market Fund
Fiera Canadian Equity Ethical Fund
Fiera Canadian Equity Growth Fund
Fiera Tactical Fixed Income Fund
Fiera Global Equity Fund
Fiera US Equity Ethical Fund
Fiera Diversified Lending Fund
Fiera Infrastructure Fund I
Fiera Diversified Balanced Fund
Fiera Long Bond Fund
Fiera Infrastructure Bond Fund

Natcan Pooled Funds established under Quebec Laws that will be transferred to the Filer upon Closing

Natcan Money Market Fund
Natcan Canadian Bond Fund
Natcan Corporate Bond Fund
Natcan Canadian Bond Index Plus Fund
Natcan Canadian Equity Fund
Natcan Small Cap Equity Fund
Natcan Social Value Canadian Equity Fund
Natcan U.S. Equity Fund
Natcan U.S. Equity Index Fund
Natcan Global Equity Fund
Natcan International Equity Fund
Natcan Currency Management Fund
Natcan Corporate Universe Bond Fund
Natcan U.S. Small Cap Fund
Natcan Arbitrage Short-Term Bond Fund
Natcan Global Focused Fund
Natcan Canadian Focused Fund
Natcan Canadian Equity Growth Fund
Natcan ESG Corporate Bond Fund
Natcan Global Dividend & Capital Appreciation Fund
Natcan Canadian Momentum Fund
Natcan LDI Provincial Bond 1-5 Years Fund
Natcan LDI Provincial Bond 5-10 Years Fund
Natcan LDI Corporate Bond Rated "A" and Over 1-5 Years Fund
Natcan LDI Corporate Bond Rated "A" and Over 5-10 Years Fund
Natcan LDI Federal Real Return Bond Fund
Natcan LDI 2X Provincial Bond 5-10 Years Fund
Natcan LDI 2X Provincial Bond 10-20 Years Fund
Natcan Canadian Dividend & Capital Appreciation Fund
Natcan Quantitative Canadian Dividend Fund
Natcan LDI Federal Bond 1-5 Years Fund
Natcan LDI Federal Bond 5-10 Years Fund
Natcan LDI Federal Bond 10-20 Years Fund
Natcan LDI Federal Bond 20+ Years Fund
Natcan LDI 2X Federal Bond 5-10 Years Fund
Natcan LDI 2X Federal Bond 10-20 Years Fund
Natcan LDI 2X Federal Bond 20+ Years Fund
Natcan LDI 3X Federal Real Return Bond Fund
Natcan Currency Management and Arbitrage Short-Term Fund
Natcan LDI 3X Government Long Term Bond Fund
Natcan LDI 3X Federal and Provincial Mid Term Bond Fund

Pooled Funds established under Ontario Laws

Sceptre Pooled Investment Fund -- Small Capitalization Section
Sceptre Pooled Investment Fund -- Canadian Equity Section
Sceptre Pooled Investment Fund -- EFT Section
Sceptre Pooled Investment Fund -- Foreign Equity Section
Sceptre Pooled Investment Fund -- Balanced Core Section
Fiera Private Wealth Opportunities Fund
Fiera Private Wealth Income Fund
Fiera Active Fixed Income Fund
Fiera Short Term Investment Fund
Fiera Balanced Fund
Fiera Canadian Equity Value Fund
Fiera Private Wealth US Equity Fund
Fiera North American Market Neutral Fund
Fiera Market Neutral Equity Fund
Fiera Global Macro Fund
Fiera Private Wealth Canadian Equity Fund
Fiera Long/Short Equity Fund
Fiera Absolute Bond Yield Fund
Fiera Multi-Manager Fund
Fiera Canadian High Income Equity Fund