Man Investments Canada Corp. and GLG EM Income Fund

Decision

Headnote

NP 11-203 -- Process for Exemptive Relief Application in Multiple Jurisdictions.

Relief granted to a commodity pool from sections 2.1(1), 2.5(2)(a) and (c) of National Instrument 81-102 Mutual Funds to permit a commodity pool to gain exposure to another investment fund in a two-tier structure, subject to certain conditions. The bottom fund will observe NI 81-102, except as permitted by NI 81-104 and in accordance with exemptive relief obtained by the Top Fund including that the bottom fund may engage in short selling -- bottom fund will never file a prospectus under National Instrument 81-101 Mutual Fund Prospectus Disclosure, but has filed a non-offering long form prospectus and will be a reporting issuer in Ontario and Quebec subject to National Instrument 81-106 Investment Fund Continuous Disclosure and NI 81-107 Independent Review Committee for Investment Funds.

Relief granted to permit purchases at the next weekly net asset value after order received two business days before, even though net asset value is calculated daily -- daily net asset value calculated to provide more frequent and up-to-date information -- National Instrument 81-102 Mutual Funds.

Relief granted from seed capital requirements for commodity pools in NI 81-104 -- manager permitted to redeem seed investment in pool provided pool has received subscriptions from investors totalling at least $5 million and provided the manager maintains working capital as required for investment fund manager under National Instrument 31-103 Registration Requirements and Exemptions -- National Instrument 81-104 Commodity Pools.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.1(1), 2.5(2)(a), 2.5(2)(c), 9.3, 19.1.

National Instrument 81-104 Commodity Pools, ss. 3.2(2)(a), 10.1.

May 18, 2012

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

MAN INVESTMENTS CANADA CORP. (the Filer)

AND GLG EM INCOME FUND (the Top Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of the Top Fund, for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) granting exemptive relief (the Requested Relief), pursuant to Part 10 of NI 81-104, from subsection 3.2(2)(a) of National Instrument 81-104 Commodity Pools (NI 81-104), which requires a commodity pool to have invested in it at all times an amount invested in securities that were issued pursuant to subsection 3.2(1)(a) of NI 81-104 and had an aggregate issue price of $50,000 (theSeed Investment), to permit the Filer to ask the Top Fund to redeem the Filer's Seed Investment.

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 each of the other provinces and territories of Canada (collectively, with Ontario, the Jurisdictions).

Interpretation

Unless expressly defined herein, terms in this application have the respective meanings given to them in National Instrument 81-102 Mutual Funds (NI 81-102), NI 81-104, National Instrument 14-101 Definitions and MI 11-102.

Representations

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

The Filer

1. The Filer is a corporation incorporated under the Canada Business Corporations Act and is the trustee and manager of the Top Fund.

2. The Filer is registered as an Investment Fund Manager in Ontario, as an adviser in the category of Portfolio Manager in Ontario and Alberta and as a dealer in the category of Exempt Market Dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia.

3. The Filer's head office is located in Toronto, Ontario.

4. None of the Filer, the Top Fund or Bottom Fund is in default of any securities legislation in any of the Jurisdictions.

5. Concurrently with this application, the Filer filed an application on behalf of the Top Fund for a decision under the Legislation granting an exemption from the requirements in subsection 2.1(1), paragraph 2.5(2)(a) and paragraph 2.5(2)(c) of NI 81-102 to permit the Top Fund to gain exposure to securities of GLG Emerging Markets Income Portfolio II Ltd. (GLG Ltd. or the Bottom Fund).

The Top Fund

6. The Top Fund will be a mutual fund subject to NI 81-102 and a commodity pool as such term is defined in NI 81-104, in that the Top Fund has adopted fundamental investment objectives that permit the Top Fund to use specified derivatives in a manner that is not permitted under NI 81-102.

7. The Top Fund filed a preliminary prospectus dated March 15, 2012 and an amended and restated preliminary prospectus dated May 4, 2012 on SEDAR (together, the Preliminary Prospectus) with respect to the proposed offering (the Offering) of Class L Units, Class M Units, Class N Units and Class O Units (together, the Units) of the Top Fund, receipts for which were issued on March 16, 2012 and May 7, 2012, respectively.

8. The Top Fund will file a final prospectus that has been prepared and filed in accordance with the securities legislation of the Jurisdictions (theFinal Prospectus); upon receiving a receipt therefor, the Top Fund will be a reporting issuer in each of the Jurisdictions.

9. As disclosed in the Preliminary Prospectus, the Top Fund's investment objectives are: (i) to provide holders of Class L Units and Class M Units with monthly tax-advantaged distributions; and (ii) to preserve capital while providing the opportunity for long-term capital appreciation for holders of Units. The Top Fund has been created to provide exposure to an actively managed, liquid and diversified portfolio of securities and other instruments (the Portfolio), to be held by the Bottom Fund, invested across various asset classes primarily within global currency markets and global emerging markets such as countries in Latin America, Central and Eastern Europe, the Middle East, Africa and Asia. In managing the Portfolio, GLG Partners LP (the GLG Investment Manager), the portfolio adviser of the Bottom Fund and an affiliate of the Filer, will pursue its strategy through both active trading and investment principally in interest rate securities and instruments, sovereign and corporate credit instruments and other fixed income securities, foreign exchange instruments and derivatives (including futures and forward contracts) that provide exposure to these asset classes. The Top Fund will obtain exposure to the Portfolio through one or more forward sale agreements (each a Forward Agreement) entered into with one or more Canadian chartered banks and/or their affiliates (each a Counterparty).

10. The Top Fund will invest substantially all of the proceeds of the Offering in a specified portfolio of common shares of Canadian public companies (the Common Share Portfolio). Under the terms of each Forward Agreement, the Counterparty will agree to pay to the Top Fund on the scheduled settlement date of the Forward Agreement (the Forward Date), as the purchase price for the Common Share Portfolio, an amount based on the value of the Portfolio on the Forward Date.

11. The Top Fund does not intend to list the Units on any stock exchange.

The Bottom Fund

12. The Bottom Fund is an exempted company with limited liability incorporated in the Cayman Islands on February 13, 2012 that will acquire and maintain the Portfolio.

13. GLG Partners (Cayman) Limited will act as manager of the Bottom Fund. The Portfolio will be actively managed by the GLG Investment Manager, a limited partnership registered under the Limited Partnership Act 1907 of England and Wales. The GLG Investment Manager is authorized and regulated in the United Kingdom by the Financial Services Authority.

14. The Bottom Fund filed a non-offering preliminary prospectus in Ontario and Quebec on March 30, 2012, a receipt for which was issued on April 2, 2012, and intends to file and obtain a receipt for a final prospectus, pursuant to which it will become a reporting issuer under the Securities Act (Ontario) and the Securities Act (Québec) and subject to the continuous disclosure requirements of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106). Accordingly, the financial statements and other reports required to be filed by the Bottom Fund will be available through SEDAR.

15. The Bottom Fund will be a mutual fund because holders of its securities will be entitled to receive, on demand, an amount computed by reference to the net asset value of the Portfolio. However, the Bottom Fund will not distribute any securities under its non-offering prospectus. Accordingly, the Bottom Fund will be a mutual fund to which NI 81-106 applies, but will not be subject to the requirements of either NI 81-102 or NI 81-104.

16. Though not subject to NI 81-104, the Bottom Fund will be a commodity pool as such term is defined in NI 81-104 in that the Bottom Fund has adopted fundamental investment objectives that permit it to use specified derivatives in a manner that is not permitted under NI 81-102.

17. The Bottom Fund has adopted the investment restrictions contained in NI 81-102 and the Portfolio is managed in accordance with these restrictions, except as otherwise permitted by NI 81-104 and in accordance with any exemptions therefrom obtained by the Top Fund including that the Bottom Fund may engage in short selling.

18. The GLG Investment Manager will monitor the Bottom Fund's compliance with its investment restrictions for the Portfolio.

Seed Investment

19. Paragraph 3.2(2)(a) of NI 81-104 states that a commodity pool may redeem, repurchase or return any amount invested in, securities issued upon the investment in the commodity pool referred to in paragraph 3.2(1)(a) of NI 81-104 only if securities issued under paragraph 3.2(1)(a) of NI 81-104 that had an aggregate issue price of $50,000 remain outstanding and at least $50,000 invested under paragraph 3.2(1)(a) remains invested in the commodity pool.

20. If the Top Fund was governed by the provisions of NI 81-102 in this regard, the Top Fund would be allowed to redeem securities issued upon the seed capital investment in the Top Fund made by the Filer upon the Top Fund having received subscriptions totaling not less than $500,000 from persons other than the persons referred to in paragraph 3.1(1)(a) of NI 81-102.

21. The Filer wishes the Top Fund to redeem the Filer's Seed Investment in the Top Fund subject to the conditions set out in this decision.

22. The Filer understands that the policy rationale behind the permanent seed capital requirement for commodity pools under NI 81-104 is to encourage promoters to ensure that the commodity pool is being properly run for the benefit of the investors by requiring that the promoter of a commodity pool, or a related party, will itself be an investor in the commodity pool at all times.

23. The Filer is obliged: (i) in accordance with the Legislation, to at all times act honestly and in good faith, and in the best interests of the Top Fund, and exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances; and (ii) in accordance with the terms of the declaration of trust governing the Top Fund, to act as a reasonably prudent trustee.

24. Having regard to the Filer's fiduciary obligation as set out above, not having $50,000 invested in the Top Fund at all times will not change how the Filer manages the Top Fund. The Filer will manage the Top Fund in accordance with the Legislation and its contractual requirements and the Filer's interests will generally be aligned to those of investors in the Top Fund.

25. None of the Filer, the Top Fund or the Bottom Fund is in default of any securities legislation in any of the Jurisdictions.

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 Requested Relief is granted, provided that:

(a) the Filer may not ask the Top Fund to redeem the Filer's Seed Investment until the Top Fund has received subscriptions totaling not less than $5,000,000 from investors other than the persons and companies referred to in paragraph 3.2(l)(a) of the NI 81-104;

(b) the Top Fund will disclose in its Final Prospectus the basis on which the Top Fund may redeem the Filer's Seed Investment;

(c) if, after the Top Fund has redeemed the Filer's Seed Investment, the value of the Units subscribed for by investors other than the persons and companies referred to in paragraph 3.2(l)(a) of NI 81-104 drops below $5,000,000 for more than 30 consecutive days, the Filer will, unless the Top Fund is in the process of being dissolved or terminated, reinvest $50,000 in the securities of the Top Fund and maintain that investment until condition (a) is again satisfied;

(d) The Filer, as investment fund manager, will at all times maintain excess working capital of a minimum of $100,000 or any higher amount that may be required in compliance with NI 31-103 Registration Requirements and Exemptions.

"Raymond Chan"
Manager, Investment Funds Branch
Ontario Securities Commission