Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Exemption pursuant to section 147 of the Securities Act (Ontario) -- Exemption from the requirements of subsection 3.1(1) of National Instrument 52-107 -- Acceptable Accounting Principles, Auditing Standards and Reporting Currency and subsection 2(1) of Regulation 1015 made pursuant to the Securities Act (Ontario) that the Applicant deliver its financial statements no later than 90 days after the end of its 2008 financial year prepared in accordance with generally accepted accounting principles.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 147.

Regulation Cited

R.R.O. 1990, Regulation 1015, am. to O. Reg. 500/06, s. 2(1).

Instruments Cited

National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, s. 3.7(b).

April 14, 2009

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

GOODMAN & COMPANY,

INVESTMENT COUNSEL LTD.

GOODMAN & COMPANY, DEALER SERVICES INC.

(the Filers, or individually the Filer)

 

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 an exemption from the requirements of subsection 3.1(1) of National Instrument 52-107 -- Acceptable Accounting Principles, Auditing Standards and Reporting Currency and subsection 2(1) of Regulation 1015 of the Securities Act (Ontario) and the equivalent provisions in the other Jurisdictions (as defined below), that the financial statements that must be delivered to the Jurisdictions (as defined below) no later than 90 days after the end of its 2008 financial year (the 2008 Consolidated Financial Statements) be prepared in accordance with generally accepted accounting principles (GAAP), only to permit the omission of Financial Information (as defined below) from the Prior Period Statements (as defined below) on the basis that the time and effort involved in including the Financial Information would outweigh any benefit to the Jurisdictions to which the 2008 Consolidated Financial Statements must be delivered (the Exemptive Relief Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

(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 Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia (the Other Jurisdictions, together with the Jurisdiction, the Jurisdictions) .

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 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 Filers:

1. Goodman & Company, Investment Counsel Ltd. (GCICL) is a corporation incorporated under the Business Corporations Act (Ontario) (the OBCA) and is registered as an advisor in the categories of Investment Counsel and Portfolio Manager or the equivalent under the securities legislation of the Jurisdictions.

2. Goodman & Company, Dealer Services Inc. (GCDSI) is a corporation amalgamated under the OBCA and is registered as a mutual fund dealer under or the equivalent under the securities legislation of the provinces of Ontario and Quebec. GCDSI is a wholly-owned subsidiary of GCICL and is exempt from the SRO membership requirement.

3. Each Filer is an indirect wholly-owned subsidiary of DundeeWealth Inc. (DWI). The head office of the Filers is located in Toronto, Ontario.

4. In 2007, DWI indirectly held a one hundred (100) percent interest in DundeeWealth BHC (BHC). BHC owned a one hundred (100) percent interest in each of Dundee Bank of Canada and The Dundee Bank (together, the Entities).

5. In 2007, BHC entered into agreements to dispose of its interests in the Entities. The sale of Dundee Bank of Canada to a non-related third party was competed in the third quarter of 2007; and the disposition of The Dundee Bank to Dundee Corporation, the controlling shareholder of DWI, was completed in 2008 (the Dispositions). The Disposition of the Entities by BHC constitutes a discontinued operating line of BHC.

6. In 2008, DWI completed an internal tax restructuring whereby DWI sold its indirect interest in BHC and, through a series of inter-company steps, GCICL acquired all of the issued and outstanding shares of BHC (the DWI Consolidation). BHC was then subsequently amalgamated with GCDSI (Amalco).

7. Under the securities legislation in each of the Jurisdictions, each Filer must deliver to the Jurisdictions its respective audited 2008 Consolidated Financial Statements not more than 90 days after the end of its respective financial year prepared in accordance with GAAP. The 2008 Consolidated Financial Statements include the 2007 comparative statements (the Prior Period Statements) of each Filer.

8. Canadian GAAP disclosure guidance, Emerging Issues Committee 89 -- Exchange of ownership interests between enterprises under common control -- wholly and partially-owned subsidiaries (EIC 89) requires that "the financial statements of the combined company for all periods should combine the assets and liabilities at their carrying value in the combining companies' records. The reported income of the combined company includes income of the combining companies for the entire fiscal period in which the combination took place. Financial statements of the combined company presented for prior periods are restated to reflect the financial position and results of operations as if the companies had been combined since their inception".

9. The DWI Consolidation is a reorganisation of entities under common control. Accordingly, the 2008 Consolidated Financial Statements for Amalco must be presented as if GDCSI had been combined with BHC since inception. The 2008 Consolidated Financial Statements for GCICL must also be presented to include the accounts of Amalco on a combined basis.

10. Strict adherence to EIC 89 requires that the Prior Period Statements of the Filers be adjusted to include full disclosure applicable to a financial institution as well as full disclosure applicable to entities with discontinued operations (the Financial Information). This requires that the Prior Period Statements presented in the 2008 Consolidated Financial Statements would need to be adjusted to include the prior year impact of BHC and all of its subsidiaries, including the Entities. This would also require substantial additional disclosure in the Prior Period Statements, including disclosure and presentation of Financial Information relating to the Entities.

11. In the absence of the Exemption Sought, each Filer will be required to include the Financial Information in its Prior Period Statements.

12. The Filers submit that applying the EIC 89 requirements with respect to the Prior Period Statements does not provide any additional benefit to the Jurisdictions.

13. The auditors for the Filers will provide an audit opinion for the 2008 Consolidated Financial Statements of each Filer that will be qualified to reflect that the Financial Information has not been included in the Prior Period Statements.

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 Exemption Sought is granted provided that:

1. Each Filer files its respective 2008 Consolidated Financial Statements with the Jurisdictions no later than 90 days after the end of its 2008 financial year; and

2. The auditors for the Filers provide a qualified audit opinion for the 2008 Consolidated Financial Statements of each Filer to reflect that the Financial Information has not been included in the Prior Period Statements.

"Mary Condon"
Commissioner
Ontario Securities Commission
 
"Carol S. Perry"
Commissioner
Ontario Securities Commission