Redwood Asset Management Inc. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval granted for change of manager of a mutual fund -- change of manager is not detrimental to unitholders or contrary to the public interest.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 5.5(1)(a), 5.5(3), 5.7.

December 12, 2013

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
REDWOOD ASSET MANAGEMENT INC. (Redwood)

AND

ASTON HILL ASSET MANAGEMENT INC. (Aston Hill)
(together, the Filers)

AND

REDWOOD ENERGY GROWTH CLASS
(the Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for approval of the proposed change of manager of the Fund from Redwood to Aston Hill (the Change of Manager) under section 5.5(1)(a) of National Instrument 81-102 Mutual 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 Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the provinces of Canada.

Interpretation

Terms defined in the Legislation, MI 11-102, National Instrument 14-101 -- Definitions, NI 81-102 or National Instrument 81-107 -- Independent Review Committee for Investment Funds (NI 81-107) have the same meanings if used in this decision, unless otherwise defined.

Representations

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

Redwood and the Fund

1. Redwood is currently the manager of the Fund pursuant to a management agreement originally made as of October 30, 2008 (the Management Agreement).

2. Redwood is a corporation incorporated under the Business Corporations Act (Ontario) (OBCA) with its head office in Toronto, Ontario and is not in default of any requirements of applicable securities legislation.

3. The Fund is a class of mutual fund shares of Ark Resource Corp. (Ark Corp.), a corporation formed under the Business Corporations Act (Ontario) by articles of incorporation dated October 30, 2008.

4. The Fund is a reporting issuer in all of the provinces of Canada and is not in default of any requirements of applicable securities legislation.

5. The securities of the Fund are currently offered under a simplified prospectus and annual information form each dated November 27, 2013.

6. The Fund is subject to, among other laws and regulations, NI 81-102, National Instrument 81-106 Investment Fund Continuous Disclosure and NI 81-107.

Aston Hill

7. Aston Hill was formed under the laws of the Province of Ontario pursuant to articles of amalgamation dated December 30, 2011.

8. Aston Hill is currently registered in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Quebec under the applicable legislation as an exempt market dealer and portfolio manager. Aston Hill is also registered in Newfoundland and Labrador, Ontario and Quebec under the applicable legislation as an investment fund manager.

9. Aston Hill is not in default of securities legislation in any jurisdiction of Canada.

10. Aston Hill is the manager of the Aston Hill Mutual Funds, a family of mutual funds currently offered by way of a combined simplified prospectus and amended and restated simplified prospectus (the Aston Hill Prospectus) and a combined annual information form and amended and restated annual information form (the Aston Hill AIF), each dated May 30, 2013.

The Change of Manager

11. Redwood and Aston Hill entered into a purchase agreement on November 6, 2013 (the Purchase Agreement) pursuant to which Redwood has agreed to sell, assign and transfer all its right, title and interest in and to the Management Agreement to Aston Hill.

12. As a result, effective on or about January 1, 2014 (the Effective Date), and subject to receipt of all necessary regulatory and shareholder approvals and the satisfaction of all other required conditions precedent set out in the Purchase Agreement, Aston Hill will become the manager of the Fund (the Proposed Transaction).

13. In accordance with the provisions of NI 81-107, Redwood referred the Proposed Transaction to the independent review committee of the Fund (the IRC) for its review. On November 13, 2013, the IRC advised Redwood that, after reasonable inquiry, the Proposed Transaction achieves a fair and reasonable result for the Fund.

14. On the Effective Date, the name of the Fund is expected to be changed by Aston Hill to "AH Energy Growth Class". Also on the Effective Date, by operation of section 3.10(1)(b) of NI 81-107, the members of the IRC will cease to be members of the IRC. The IRC will therefore be reconstituted such that new members will be appointed effective on that date. Such new members will be the same individuals that currently comprise the independent review committee of the other mutual funds managed by Aston Hill.

15. Redwood will have no further responsibilities in respect of the Fund after the Effective Date. Redwood will continue to act as manager for certain other open-end funds that are not relevant to the Proposed Transaction.

16. A press release in connection with the announcement of the change of manager was issued and disseminated on November 6, 2013. Amendments to the simplified prospectus, annual information form and fund facts of the Fund and a material change report were filed in connection with the announcement of the change of manager on November 15, 2013 and under SEDAR Project Nos. 1969989 and 2133694.

17. Redwood considers that the experience and integrity of each of the members of the Aston Hill current management team is apparent by their education and years of experience in the investment industry.

18. While the Fund's name will change, Aston Hill intends to manage and administer the Fund in a similar manner as Redwood. There is therefore no intention to change the investment objectives, strategies or fees and expenses of the Fund. The portfolio manager of the Fund is, and will continue to be after the Change of Manager, Aston Hill. All material agreements regarding the administration of the Fund will either be assigned to Aston Hill or Aston Hill will enter into new agreements as required.

19. Securityholders of the Fund will be asked to approve the change of manager at a special meeting to be held on December 13, 2013, as such special meeting may be postponed or adjourned (theSpecial Meeting). A notice of meeting and a management information circular (the Circular) was mailed to securityholders of the Fund on November 20, 2013 and filed on SEDAR in accordance with applicable securities legislation. The Circular contains: (a) sufficient information regarding the business, management and operations of Aston Hill, including details of the funds it manages and its officers and board of directors; and (b) all information necessary to allow securityholders to make an informed decision about the change of manager and to vote on the change of manager. All other information and documents necessary to comply with the applicable proxy solicitation requirements of securities legislation for the Special Meeting have been mailed to securityholders of the Fund.

20. The resignation of Redwood as manager of the Fund will be effective on the Effective Date. On that date, Aston Hill will assume the role of manager of the Fund under the Management Agreement.

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 provided that Redwood obtains the prior approval of the securityholders of the Fund of the change of manager at the Special Meeting.

"Vera Nunes"

Manager, Investment Funds

Ontario Securities Commission