Securities Law & Instruments

Headnote

Section 80 of the Commodity Futures Act (Ontario) -- Foreign adviser exempted from the adviser registration requirement in paragraph 22(1)(b) of the CFA where such adviser acts as an adviser in respect of commodity futures contracts or commodity futures options (Contracts) for certain investors in Ontario who meet the definition of "permitted client" in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) -- Contracts are primarily traded on commodity futures exchanges outside of Canada and primarily cleared outside of Canada -- foreign adviser relies on the international sub-adviser exemption under section 8.26.1 of NI 31-103 to act as sub-adviser in respect of securities.

Terms and conditions of exemption correspond to the relevant terms and conditions of the comparable exemption from the adviser registration requirement available to international advisers in respect of securities set out in section 8.26 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations -- Exemption also subject to a "sunset clause" condition.

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C.20. as am., ss. 1(1), 22(1)(b), 80.

Securities Act, R.S.O. 1990, c. S.5, as am., s. 25(3).

Instruments Cited

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 1.1, 8.26, 8.26.1.

Ontario Securities Commission Rule 13-502 Fees.

IN THE MATTER OF THE COMMODITY FUTURES ACT, R.S.O. 1990, CHAPTER C.20, AS AMENDED (the CFA) AND IN THE MATTER OF UNIGESTION SA

ORDER (Section 80 of the CFA)

UPON the application (the Application) of Unigestion SA (the Applicant) to the Ontario Securities Commission (the Commission) for an order pursuant to section 80 of the CFA that the Applicant and any individuals engaging in, or holding themselves out as engaging in, the business of advising others as to trading in Contracts (as defined below) on the Applicant's behalf (the Representatives) be exempt, for a specified period of time, from the adviser registration requirement in paragraph 22(1)(b) of the CFA, subject to certain terms and conditions;

AND UPON considering the Application and the recommendation of staff of the Commission;

AND WHEREAS for the purposes of this Order:

"CFA Adviser Registration Requirement" means the requirement in paragraph 22(1)(b) of the CFA that prohibits a person or company from acting as an adviser with respect to trading in Contracts unless the person or company is registered in the appropriate category of registration under the CFA;

"Contract" has the meaning ascribed to that term in subsection 1(1) of the CFA;

"FINMA" means the Swiss Financial Market Supervisory Authority;

"Foreign Contract" means a Contract that is primarily traded on one or more organized exchanges that are located outside of Canada and primarily cleared through one or more clearing corporations that are located outside of Canada;

"International Adviser Exemption" means the exemption set out in section 8.26 of NI 31-103 from the OSA Adviser Registration Requirement;

"International Investment Fund Manager Exemption" means the exemption set out in section 4 of Multilateral Instrument 32-102 -- Registration Exemptions for Non-Resident Investment Fund Managers;

"NI 31-103" means National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, as amended from time to time;

"OSA" means the Securities Act, R.S.O. 1990, c. S.5, as amended from time to time;

"OSA Adviser Registration Requirement" means the requirement in the OSA that prohibits a person or company from engaging in or holding himself, herself or itself out as engaging in the business of advising others as to the investing in or the buying or selling of securities, unless the person or company is registered in the appropriate category of registration under the OSA;

"Permitted Client" means a client in Ontario that is a "permitted client", as that term is defined in section 1.1 of NI 31-103, except that for purposes of this Order such definition shall exclude a person or company registered as an adviser or dealer under the securities legislation or derivatives legislation, including commodity futures legislation, of a jurisdiction of Canada; and

"specified affiliate" has the meaning ascribed to that term in Form 33-109F6 to National Instrument 33-109Registration Information.

AND UPON the Applicant having represented to the Commission that:

1. The Applicant is a société anonyme formed under the laws of Switzerland, with its head office and principal place of business located at 8C, avenue de Champel, CP 387, CH 1211 Geneva 12, Switzerland.

2. The Applicant is regulated as an investment fund manager (IFM) by FINMA. The IFM registration with FINMA includes the authority to act as portfolio manager, including the authority to advise on, inter alia, securities, options, futures, swaps, forward rate agreements and any other derivative contracts, and to act as distributor. The Applicant is a portfolio manager with four principal areas of expertise: listed equities, private equity, multi-asset and alternative strategies. The Applicant currently provides advice with respect to Contracts to numerous investment funds and separately managed accounts in Switzerland.

3. As of June 30, 2017, the Applicant had CA$16.1 billion of assets under direct management worldwide.

4. The Applicant is not registered in any capacity under the CFA or the OSA, or the securities legislation, commodity futures legislation, or derivatives legislation of any other jurisdiction in Canada.

5. In Ontario, the Applicant currently relies upon the international sub-adviser exemption under section 8.26.1 of NI 31-103. In Quebec, the Applicant currently relies and intends to continue to rely upon the International Investment Fund Manager Exemption and the International Adviser Exemption to act as an investment fund manager in respect of certain investment funds and to provide certain advisory services in respect of securities to Permitted Clients.

6. The Applicant is not in default of securities legislation, commodity futures legislation or derivatives legislation of any jurisdiction in Canada. The Applicant is also in compliance in all material respects with securities laws, commodity futures laws and derivatives laws of Switzerland.

7. The Applicant is a wholly-owned subsidiary of Unigestion Holding Inc., a privately held company, which also owns all of the shares of Unigestion Asset Management (Canada) Inc. (UAMC) and Unigestion (UK) Ltd. (Unigestion UK). The assets under management of UAMC, as a registered portfolio manager and investment fund manager, and the Applicant and Unigestion UK, under the International Adviser Exemption, for Canadian clients was approximately USD $2.1 billion as of June 30, 2017.

8. In addition to the Applicant, UAMC and Unigestion UK, Unigestion Holding Inc. owns shares of other portfolio management subsidiaries carrying on business in different countries. Unigestion Holding Inc. and all of its subsidiaries are referred to as the "Unigestion Group". Established in 1971, Unigestion Group is a privately owned asset management and advisory company with 227 employees having 29 nationalities as of June 30, 2017. The Unigestion Group is headquartered in Geneva, Switzerland and has offices in major financial centers around the world. The Unigestion Group's focus is to offer robust, tailor-made investment solutions to a limited number of sophisticated institutions and families. As of June 30, 2017, the Unigestion Group had USD$24.2 billion of assets under management, 94% managed on behalf of around 400 institutional investors and 6% on behalf of a few high net worth families.

9. UAMC is a corporation incorporated under Canada Business Corporations Act with a head office in Toronto, Ontario and a place of business in Montreal, Quebec. UAMC is registered as a portfolio manager and an exempt market dealer with the securities regulators of Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan, and as an investment fund manager with the Commission and the Autorité des marchés financiers.

10. Unigestion UK, a company incorporated under the laws of England, with its head office and principal place of business located at Media House, 4 Stratford Pl., Marylebone, London W1C 1AT, U.K., is authorized and regulated as a portfolio manager by the UK Financial Services Authority. Unigestion UK currently relies upon the International Adviser Exemption to provide certain advisory services to a Permitted Client in Saskatchewan.

11. In Canada, UAMC acts as the investment fund manager and portfolio manager with respect to securities and other asset classes, other than Contracts, to the Unigestion Funds, a group of non-prospectus qualified mutual funds formed or to be formed under the laws of Ontario. State Street Trust Company Canada is the trustee, custodian, registrar and transfer agent of the Unigestion Funds. The Applicant acts as sub-adviser with respect to securities and other asset classes, other than Contracts, to each of the Unigestion Funds.

12. All of the subscribers, to date, in the Unigestion Funds are both "accredited investors," as defined by National Instrument 45-106 -- Prospectus Exemptions, and Permitted Clients, except one, which has been granted a discretionary prospectus exemption when purchasing as principal by the Commission.

13. UAMC will be establishing new Unigestion Funds that may invest in Foreign Contracts, in addition to securities and other asset classes. It is expected that Foreign Contracts will represent around 20% of the gross exposure of the portfolios of these new funds.

14. UAMC is not currently registered or relying on any exemption from registration under the CFA. UAMC will not act as principal adviser with respect to Contracts unless it becomes registered in the appropriate category under the CFA with the Commission.

15. The Applicant will be appointed principal adviser with respect to Foreign Contracts to the Unigestion Funds. UAMC will continue to act as the investment fund manager and portfolio manager, and the Applicant will continue to act as sub-adviser, to the Unigestion Funds with respect to securities and other asset classes, other than Contracts.

16. Both UAMC and the Applicant will implement policies, procedures and controls to ensure that there will be no confusion of the Applicant's roles and responsibilities as principal adviser with respect to Foreign Contracts and as sub-adviser with respect to securities and other asset classes, other than Contracts, to the Unigestion Funds. This will include the Applicant entering into a separate principal adviser agreement with the Unigestion Funds investing in Foreign Contracts. The principal adviser agreement will provide that the Applicant alone will have the authority to advise with respect to and the responsibility to instruct futures brokers and the custodian of the Unigestion Funds as to trades in Foreign Contracts. Also, the sub-adviser agreement between UAMC and the Applicant will be amended to exclude Contracts from the perimeter of UAMC's responsibility.

17. In addition to the Applicant's intention to become the principal adviser with respect to Foreign Contracts to the Unigestion Funds, institutional investors in Ontario that are Permitted Clients currently seek to engage the Applicant as a discretionary investment manager for purposes of implementing certain specialized investment strategies.

18. The Applicant currently seeks to act as a discretionary commodity futures advisory manager for Ontario institutional investors that are Permitted Clients (including non-prospectus qualified mutual funds such as the Unigestion Funds). The Applicant's advisory services to Permitted Clients in Ontario will primarily include the use of specialized investment strategies employing Foreign Contracts.

19. Were the proposed advisory services limited to securities (as defined in subsection 1(1) of the OSA), the Applicant would be able to rely on the International Adviser Exemption and carry out such activities for Permitted Clients on a basis that would be exempt from the OSA Adviser Registration Requirement.

20. There is currently no exemption from the CFA Adviser Registration Requirement that is equivalent to the International Adviser Exemption. Consequently, in order to advise Permitted Clients as to trading in Foreign Contracts, in the absence of this Order, the Applicant would be required to satisfy the CFA Adviser Registration Requirement by applying for and obtaining registration under the CFA in the appropriate category of registration.

21. To the best of the Applicant's knowledge, the Applicant confirms that there are currently no regulatory actions of the type contemplated by the Notice of Regulatory Action attached as Appendix "B".

AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to make this Order;

IT IS ORDERED, pursuant to section 80 of the CFA, that the Applicant and the Representatives are exempt from the adviser registration requirement in paragraph 22(1)(b) of the CFA in respect of providing advice to Permitted Clients as to the trading of Foreign Contracts provided that:

(a) the Applicant provides advice to Permitted Clients only as to trading in Foreign Contracts and does not advise any Permitted Client as to trading in Contracts that are not Foreign Contracts, unless providing such advice is incidental to its providing advice on Foreign Contracts;

(b) the Applicant's head office or principal place of business remains in Switzerland;

(c) the Applicant is registered in a category of registration, or operates under an exemption from registration, under the applicable securities or commodity futures legislation of Switzerland that permits it to carry on the activities in Switzerland that registration under the CFA as an adviser in the category of commodity trading manager would permit it to carry on in Ontario;

(d) the Applicant continues to engage in the business of an adviser (as defined in the CFA) in Switzerland;

(e) as at the end of the Applicant's most recently completed financial year, not more than 10% of the aggregate consolidated gross revenue of the Applicant, its affiliates and its affiliated partnerships (excluding the gross revenue of an affiliate or affiliated partnership of the Applicant if the affiliate or affiliated partnership is registered under securities legislation, commodity futures legislation or derivatives legislation of a jurisdiction of Canada) was derived from the portfolio management activities of the Applicant, its affiliates and its affiliated partnerships in Canada (which, for greater certainty, includes both securities-related and commodity-futures-related activities);

(f) before advising a Permitted Client with respect to Foreign Contracts, the Applicant notifies the Permitted Client of all of the following:

(i) the Applicant is not registered in Ontario to provide the advice described in paragraph (a) of this Order;

(ii) the foreign jurisdiction in which the Applicant's head office or principal place of business is located;

(iii) all or substantially all of the Applicant's assets may be situated outside of Canada;

(iv) there may be difficulty enforcing legal rights against the Applicant because of the above; and

(v) the name and address of the Applicant's agent for service of process in Ontario;

(g) the Applicant has submitted to the Commission a completed Submission to Jurisdiction and Appointment of Agent for Service in the form attached as Appendix "A";

(h) the Applicant notifies the Commission of any regulatory action initiated after the date of this Order with respect to the Applicant or any predecessors or the specified affiliates of the Applicant by completing and filing Appendix "B" within 10 days of the commencement of each such action; and

(i) if the Applicant is not registered under the OSA and does not rely on the International Adviser Exemption, by December 31st of each year, the Applicant pays a participation fee based on its specified Ontario revenues for its previous financial year in compliance with the requirements of Part 3 and section 6.4 of Ontario Securities Commission Rule 13-502 Fees as if the Applicant relied on the International Adviser Exemption; and

IT IS FURTHER ORDERED that this Order will terminate on the earliest of:

(a) the expiry of any transition period as may be provided by law, after the effective date of the repeal of the CFA;

(b) six months, or such other transition period as may be provided by law, after the coming into force of any amendment to Ontario commodity futures law (as defined in the CFA) or Ontario securities law (as defined in the OSA) that affects the ability of the Applicant to act as an adviser to a Permitted Client; and

(c) five years after the date of this Order.

DATED at Toronto, Ontario, this 27th day of October, 2017.

"Tim Moseley"
Commissioner
Ontario Securities Commission
 
"Deborah Leckman"
Commissioner
Ontario Securities Commission

 

APPENDIX "A"

SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT FOR SERVICE

INTERNATIONAL DEALER OR INTERNATIONAL ADVISER EXEMPTED FROM REGISTRATION UNDER THE COMMODITY FUTURES ACT, ONTARIO

1. Name of person or company ("International Firm"):

2. If the International Firm was previously assigned an NRD number as a registered firm or an unregistered exempt international firm, provide the NRD number of the firm:

3. Jurisdiction of incorporation of the International Firm:

4. Head office address of the International Firm:

5. The name, e-mail address, phone number and fax number of the International Firm's individual(s) responsible for the supervisory procedure of the International Firm, its chief compliance officer, or equivalent.

Name:
E-mail address:
Phone:
Fax:

6. The International Firm is relying on an exemption order under section 38 or section 80 of the Commodity Futures Act (Ontario) that is similar to the following exemption in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (the "Relief Order"):

[ ] Section 8.18 [international dealer]

[ ] Section 8.26 [international adviser]

[ ] Other [specify]:

7. Name of agent for service of process (the "Agent for Service"):

8. Address for service of process on the Agent for Service:

9. The International Firm designates and appoints the Agent for Service at the address stated above as its agent upon whom may be served a notice, pleading, subpoena, summons or other process in any action, investigation or administrative, criminal, quasi-criminal or other proceeding (a "Proceeding") arising out of or relating to or concerning the International Firm's activities in the local jurisdiction and irrevocably waives any right to raise as a defence in any such proceeding any alleged lack of jurisdiction to bring such Proceeding.

10. The International Firm irrevocably and unconditionally submits to the non-exclusive jurisdiction of the judicial, quasi-judicial and administrative tribunals of the local jurisdiction in any Proceeding arising out of or related to or concerning the International Firm's activities in the local jurisdiction.

11. Until 6 years after the International Firm ceases to rely on the Relief Order, the International Firm must submit to the regulator

a. a new Submission to Jurisdiction and Appointment of Agent for Service in this form no later than the 30th day before the date this Submission to Jurisdiction and Appointment of Agent for Service is terminated;

b. an amended Submission to Jurisdiction and Appointment of Agent for Service no later than the 30th day before any change in the name or above address of the Agent for Service;

c. a notice detailing a change to any information submitted in this form, other than the name or above address of the Agent for Service, no later than the 30th day after the change.

12. This Submission to Jurisdiction and Appointment of Agent for Service is governed by and construed in accordance with the laws of the local jurisdiction.

Dated: _______________

______________________________

(Signature of the International Firm or authorized signatory)

______________________________

(Name of signatory)

______________________________

(Title of signatory)

Acceptance

The undersigned accepts the appointment as Agent for Service of _______________ [Insert name of International Firm] under the terms and conditions of the foregoing Submission to Jurisdiction and Appointment of Agent for Service.

Dated: _______________

______________________________

(Signature of the Agent for Service or authorized signatory)

______________________________

(Name of signatory)

______________________________

(Title of signatory)

This form, and notice of a change to any information submitted in this form, is to be submitted through the Ontario Securities Commission's Electronic Filing Portal:

https://www.osc.gov.on.ca/filings

 

APPENDIX "B"

NOTICE OF REGULATORY ACTION

1. Settlement Agreements

Has the firm, or any predecessors or specified affiliates{1} of the firm entered into a settlement agreement with any financial services regulator, securities or derivatives exchange, SRO or similar agreement with any financial services regulator, securities or derivatives exchange, SRO or similar organization?

Yes _____ No _____

If yes, provide the following information for each settlement agreement:

- - - - - - - - - - - - - - - - - - - -

Name of entity

Regulator/organization

Date of settlement (yyyy/mm/dd)

Details of settlement

Jurisdiction

- - - - - - - - - - - - - - - - - - - -

2. Disciplinary History

Has any financial services regulator, securities or derivatives exchange, SRO or similar organization:

 

 

Yes

No

 

a)

Determined that the firm, or any predecessors or specified affiliates of the firm violated any securities regulations or any rules of a securities or derivatives exchange, SRO or similar organization?

_____

_____

 

(b)

Determined that the firm, or any predecessors or specified affiliates of the firm made a false statement or omission?

_____

_____

 

(c)

Issued a warning or requested an undertaking by the firm, or any predecessors or specified affiliates of the firm?

_____

_____

 

(d)

Suspended or terminated any registration, licensing or membership of the firm, or any predecessors or specified affiliates of the firm?

_____

_____

 

(e)

Imposed terms or conditions on any registration or membership of the firm, or predecessors or specified affiliates of the firm?

_____

_____

 

(f)

Conducted a proceeding or investigation involving the firm, or any predecessors or specified affiliates of the firm?

_____

_____

 

(g)

Issued an order (other than an exemption order) or a sanction to the firm, or any predecessors or specified affiliates of the firm for securities or derivatives-related activity (e.g. cease trade order)?

_____

_____

If yes, provide the following information for each action:

Name of entity

 

Type of action

 

Regulator/organization

 

Date of action (yyyy/mm/dd)

Reason for action

 

Jurisdiction

3. Ongoing Investigations

Is the firm aware of any ongoing investigation of which the firm or any of its specified affiliates is the subject?

Yes _____ No _____

If yes, provide the following information for each investigation:

- - - - - - - - - - - - - - - - - - - -

Name of entity

Reason or purpose of investigation

Regulator/organization

Date investigation commenced (yyyy/mm/dd)

Jurisdiction

- - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - -

Name of firm:

Name of firm's authorized signing officer or partner

Title of firm's authorized signing officer or partner

Signature

Date (yyyy/mm/dd)

- - - - - - - - - - - - - - - - - - - -

Witness

The witness must be a lawyer, notary public or commissioner of oaths.

- - - - - - - - - - - - - - - - - - - -

Name of witness

Title of witness

Signature

Date (yyyy/mm/dd)

- - - - - - - - - - - - - - - - - - - -

This form is to be submitted through the Ontario Securities Commission's Electronic Filing Portal:

https://www.osc.gov.on.ca/filings

{1} In this Appendix, the term "specified affiliate" has the meaning ascribed to that term in Form 33-109F6 to National Instrument 33-109 Registration Information.