Caisse de dépôt et placement du Québec

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Filer is fund manager primarily for public and parapublic pension and insurance plans -- Filer does not technically meet the definition of an "eligible institutional investor" for purposes of Regulation 62-103 -- Filer provides investment management services to certain public and parapublic pension and insurance plans as mandated by statute, which services are comparable to the services provided by an "investment manager" for purposes of Regulation 62-103 -- Relief from early warning, moratorium and insider reporting requirements granted provided that Filer complies with reporting, filing and any other applicable requirements as if it was an "eligible institutional investor" under Regulation 62-103.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 102.1(1) to (3), 107(2).

Securities Act (Québec), ss. 89.3, 96, 97, 263.

Regulation 55-104 respecting Insider Reporting Requirements and Exemptions.

Regulation 62-103 respecting the Early Warning System and Related Take-Over Bid and Insider Reporting Issues.

[TRANSLATION]

March 31, 2015

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 THE CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC (the "Caisse" or the "Filer")

DECISION

Background

The securities regulatory authority or the regulator in each of the Jurisdictions (the "Decision Maker") has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") according to which:

a) the Filer is exempt from the early warning requirements;

b) the Filer is exempt from the moratorium provisions; and

c) the Filer is exempt from the insider reporting requirements,

provided that, in each case, the Filer meets and complies with the applicable reporting and filing requirements and other conditions enumerated in Regulation 62-103 respecting the Early Warning System and Related Take-Over Bid and Insider Reporting Issues ("Regulation 62-103") as if the Filer was an eligible institutional investor (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 section 4.7(1) of Regulation 11-102 respecting 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, Nunavut, Northwest Territories and Yukon; 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 14-101 respecting Definitions, Regulation 62-103 and Regulation 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 Caisse was established in 1965 under the Act respecting the Caisse de dépôt et placement du Québec (the "Act respecting the Caisse"). The activities of the Caisse are managed in accordance with the requirements of the Act respecting the Caisse.

2. The head office of the Caisse is located in Québec and its main place of business is located in Montréal, Québec.

3. The Caisse is not in default of the securities legislation of any jurisdiction of Canada.

4. The mission of the Caisse is to receive moneys on deposit as provided by the Act respecting the Caisse and to manage them with a view to achieving optimal return on capital within the framework of their depositors' investment policies while contributing to Québec's economic development.

5. The Act respecting the Caisse sets out that the Caisse shall receive on deposit all moneys whereof such deposit is provided for by law. In addition, the Caisse may receive on deposit moneys from public bodies, categories of public bodies and pension funds of public bodies (the "Caisse Depositors"). Members of the public cannot become Caisse Depositors. Appendix A presents the Caisse Depositors as at December 31, 2014.

6. As at December 31, 2014, the net assets of the Caisse Depositors totaled over $226 billion.

7. The Caisse invests amounts from the Caisse Depositors in financial markets in Québec, Canada and elsewhere in the world to enable them to grow.

8. The Act respecting the Caisse authorizes the Caisse to, for the purposes of the acquisition, holding or disposal of investments under the Act respecting the Caisse, engage in any activity or operation that allows the value of the investments to be protected or enhanced, or that is aimed at deriving the best possible financial return.

9. The Act respecting the Caisse sets out the types of securities, property and other assets that the Caisse may acquire, hold, sell, invest in or conclude, and establishes a framework for their use.

10. The Act respecting the Caisse provides that the acquisition by the Caisse of shares and debt instruments of legal persons is subject to restrictions, including:

a) a maximum percentage of common shares or a class of common shares of the same legal person that the Caisse is permitted to hold, except as otherwise permitted by the Act respecting the Caisse;

b) a maximum percentage of assets that the Caisse is permitted to use to invest in indexed fund units and in common shares; and

c) a maximum percentage of assets that the Caisse is permitted to use to acquire securities including debt instruments issued by the same legal person, except as otherwise permitted by the Act respecting the Caisse.

11. The Act respecting the Caisse requires that the Caisse advise the Caisse Depositors on investments

12. The Caisse may enter into a service agreement with each of the Caisse Depositors setting out the services offered, the functions and responsibilities assumed by the Caisse, the information and communication methods to be used, and the reporting methods applied.

13. As required by the Act respecting the Caisse, the affairs of the Caisse are administered by a board of directors (the "Board") consisting of no fewer than 9 and no more than 15 members, including a chair and the president and chief executive officer of the Caisse who is a member of the Board by virtue of his or her office. Board members other than the chair and president and chief executive officer are appointed by the Government of Québec for a term of up to five years, after consultation with the Board.

14. At least two thirds of the Board, including the chair, are independent, and accordingly have no relationships or interests likely to affect the quality of their decisions with regard to the interests of the Caisse.

15. The Board establishes the directions and framework policies pertaining to risk management, approves investment policies, standards and procedures and adopts a responsible investment policy.

16. In accordance with the Act respecting the Caisse, the Caisse submits a report on its operations for the previous year to the Québec Minister of Finance before April 15 each year. Such report is then forthwith laid before the Québec National Assembly.

17. The annual report of the Caisse contains: a) a summary of operations and a statement of policies pursued; b) audited financial statements drawn up in accordance with generally accepted accounting principles; c) a detailed statistical statement respecting each class of securities, showing average yield for each class; d) an annual statement of each immovable acquired or held by the Caisse; and e) Board committee reports.

18. In accordance with the Act respecting the Caisse, the books and accounts of the Caisse are audited jointly every year by the Auditor General of Québec and an external auditor appointed by the Government of Québec. The joint report accompanies the annual report of the Caisse. Any investment or financial transaction that is not in compliance with the Act respecting the Caisse would be mentioned in the report.

19. The Caisse provides the Québec Minister of Finance with any and all information that the Minister requires on its operations and activities and those of its wholly-owned subsidiaries.

20. The investment management activities carried out by the Caisse related to assets transferred to it by the Caisse Depositors are comparable to the services provided by an investment manager.

21. The Caisse does not qualify as an eligible institutional investor for the purpose of Regulation 62-103, because it does not technically satisfy the definition of "investment manager" for the purposes of Regulation 62- 103 as it is not registered as an adviser nor does it act as an adviser in reliance upon exemptions from adviser registration requirement under the Legislation. As a result, unless the Exemption Sought is granted, the Caisse cannot rely upon the exemptions from the early warning requirements, the moratorium provisions and the insider reporting requirements that may be available to eligible institutional investors under Regulation 62-103.

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 complies with and meets the applicable reporting and filing requirements and other conditions enumerated in Regulation 62-103 as if the Filer was an eligible institutional investor.

"Gilles Leclerc"
Superintendent, Securities Markets
Autorité des marchés financiers

 

APPENDIX A

List of the Caisse's Depositors:

• Régie des rentes du Québec

• Régime supplémentaire de rentes pour les employés de l'industrie de la construction du Québec

• Régime de retraite des employés du gouvernement et des organismes publics Régime de retraite des élus municipaux

• Régimes particuliers -- Régime de retraite des employés du gouvernement fédéral intégrés au gouvernement du Québec

• Régimes particuliers -- Régime de retraite des anciens employés de la Cité de Westmount

• Régimes particuliers -- Régime de retraite des anciens employés de la Ville de Saint-Laurent

• Régime de retraite des élus municipaux

• Régime complémentaire de rentes des techniciens ambulanciers/ paramédics et des services préhospitaliers d'urgence

• Ministère des Finances, Gouvernement du Québec:

• Fonds d'amortissement des régimes de retraite

• Régime de retraite des membres de la Sûreté du Québec -- caisse des employeurs

• Fonds des générations

• Fonds des congés de maladie accumulés

• Fonds d'information sur le territoire

• Régime de retraite de l'Université du Québec

• Régime de retraite du personnel des CPE et des garderies privées conventionnées du Québec

• Régime de retraite pour certains employés de la Commission scolaire de la Capitale

• Régime de rentes pour le personnel non enseignant de la Commission des écoles catholiques de Montréal

• Régime de retraite des membres de la Sûreté du Québec -- Caisse participants

• Régime de retraite des employés de la Ville de Laval

• Régime de retraite des employés en fonction au Centre Hospitalier Côte-des-Neiges Fonds commun de placement des régimes de retraite de l'Université Laval

• Fiducie globale Ville de Magog

• Régime de retraite des employées et employés de la Ville de Sherbrooke

• Régime de retraite des agents de la paix en services correctionnels Régime complémentaire de retraite des employés réguliers de la Société de transport de Sherbrooke

• Régie des marchés agricoles et alimentaires du Québec

• La Financière agricole du Québec

• Autorité des marchés financiers

• Commission de la santé et de la sécurité du travail

• Société de l'assurance automobile du Québec

• Fédération des producteurs de bovins du Québec

• Régime de rentes de survivants Conseil de gestion de l'assurance parentale

• Office de la protection du consommateur

• Société des alcools du Québec

• Agence du revenu du Québec