Canadian Imperial Bank of Commerce et al. - MRRS Decision

Headnote

Exemptions from the mutual fund self-dealingprohibitions of clauses 111(2)(a), 111(3) and 118(2)(a) of theSecurities Act (Ontario). Mutual funds allowed to make purchasesand sales of securities of Canadian Imperial Bank of Commerce,parent company to the managers of the mutual funds, and to retainthose securities provided that a fund governance mechanism isused to oversee the holdings, purchases or sales of these securitiesfor the mutual funds and to ensure that such holdings, purchasesor sales have been made free from any influence by the CanadianImperial Bank of Commerce and without taking into account anyconsideration relevant to the Canadian Imperial Bank of Commerce.

Statutes Cited

Securities Act (Ontario), R.S.O. 1990 c. S.5,as am., 111(2)(a), 111(3) and 118(2)(a).

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,

ONTARIO, QUÉBEC, NOVASCOTIA AND

NEWFOUNDLAND AND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CANADIAN IMPERIAL BANK OFCOMMERCE ("CIBC")

CIBC ASSET MANAGEMENT INC.(FORMERLY TALVEST FUND MANAGEMENT INC.) ("CIBC AM")

TAL GLOBAL ASSET MANAGEMENTINC. ("TAL")

TAL PRIVATE MANAGEMENT LTD.("TAL PRIVATE")

AND THE FUNDS LISTED ON SCHEDULE"A" (THE "CURRENT FUNDS")

MRRS DECISION DOCUMENT

WHEREAS CIBC, CIBC AM, TAL and TAL Privatehave made an application to the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof the provinces of British Columbia, Alberta, Saskatchewan,Ontario, Québec, Nova Scotia and Newfoundland and Labrador(the "Jurisdictions") for a decision (the "Decision")pursuant to the securities legislation of the Jurisdictions(the "Legislation") that the following provisionsdo not apply so as to prevent the Current Funds together withsuch other funds as may be advised by CIBC or an affiliate ofCIBC from time to time (individually a "Fund" andcollectively the "Funds") from investing in, or continuingto hold an investment in, securities of CIBC:

(a) in respect of the Funds, other thanthe Pools, as hereinafter defined (the "Public Funds"),the provision prohibiting a mutual fund from knowingly makingor holding an investment in any person or company who isa substantial security holder of the mutual fund, its managementcompany or distribution company;

(b) in respect of the Public Funds, theprovision prohibiting a mutual fund from knowingly makingor holding an investment in an issuer in which a substantialsecurity holder of the mutual fund, its management companyor its distribution company has a significant interest;

(c) the provision prohibiting a portfoliomanager or, in British Columbia, a mutual fund, from investingin any issuer in which a responsible person is an officeror director unless the specific fact is disclosed to theclient and the written consent of the client to the investmentis obtained before the investment (the provisions of (a),(b) and (c) being collectively the "Investment Restrictions");

(d) in respect of the Funds listed on Schedule"A" as TAL Pools (together with such other fundsas may be established and advised by CIBC or an affiliateof CIBC from time to time, the securities of which are soldon a private placement basis, the "Pools"), theprovision in the Legislation of Ontario, Québec andAlberta prohibiting a mutual fund from knowingly makingor holding an investment in any person or company who isa substantial security holder of the mutual fund, its managementcompany or distribution company; and

(e) in respect of the Pools, the provisionin the Legislation of Ontario, Québec and Alberta,prohibiting a mutual fund from knowingly making or holdingan investment in an issuer in which a substantial securityholder of the mutual fund, its management company or itsdistribution company has a significant interest (the provisionsof (c), (d) and (e) being collectively the "Pools'Investment Restrictions").

AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this Application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Québec Commission Notice 14-101;

AND WHEREAS it has been represented byCIBC, CIBC AM, TAL and TAL Private to the Decision Makers that:

1. The Funds are or will be open-ended mutualfund trusts established, or mutual fund corporations incorporated,under the laws of the Province of Ontario or of Canada.

2. CIBC AM, a wholly owned subsidiary of CIBC,is currently the manager and portfolio adviser of each ofthe Current Funds listed on Schedule "A" as CM Funds.CIBC Securities Inc., ("CIBCSI") a wholly ownedsubsidiary of CIBC, is currently the principal distributorof the Current Funds listed on Schedule "A" as CMFunds. CIBC AM is currently the manager, portfolio adviserand principal distributor of the Current Funds listed on Schedule"A" as Talvest Funds. For each of the Funds listedon Schedule "A" as TAL Pools, either TAL or TALPrivate, a wholly-owned subsidiary of CIBC, is currently themanager and portfolio adviser. For each of the Current Fundslisted on Schedule "A" as CIBC Funds:

(i) CIBC is currently the manager;

(ii) TAL is currently the portfolio adviser;and

(iii) CIBCSI is currently the principaldistributor.

3. The securities of the Public Funds areor will be offered for sale in all of the provinces and territoriesof Canada. Each of the Public Funds is or will be a reportingissuer under the Legislation and each Current Fund is noton a list of defaulting issuers maintained under the Legislation.

4. The securities of the Pools are distributedpursuant to prospectus exemptions. Securities of the Poolsare only available to clients in accounts which are discretionaryand are managed by an affiliate of CIBC. Upon opening a discretionaryaccount, the consent of the client is obtained to invest insecurities of CIBC. Investments made by the Pools are passiveand are not made to exercise control over or management ofthe issuer.

5. Directors and officers of CIBC AM, TAL,TAL Private or such other affiliate of CIBC who is the portfolioadviser to a Fund (each a "Related Adviser") mayalso be directors or officers of CIBC but do not and willnot participate in the formulation of, or have access priorto implementation to, investment decisions made on behalfof the Funds.

6. The Related Advisers believe that it wouldbe in the best interests of investors of the Funds to be permittedto invest in securities of CIBC, in keeping with the investmentobjectives of the Funds, though only up to the limit allowedby applicable Legislation.

7. The managers of the Funds will appointan independent review committee (the "Independent Committee"),comprised entirely of individuals who are wholly independentof CIBC, to oversee the holdings, purchases or sales of securitiesof CIBC for the Funds.

8. The Independent Committee shall reviewthe holdings, purchases or sales of securities of CIBC toensure that they have been made free from any influence byCIBC and without taking into account any consideration relevantto CIBC.

9. In reviewing the Funds' purchases, salesand continued holdings of securities of CIBC, the IndependentCommittee will take into consideration the best interestsof unitholders of the Funds and no other factors.

10. Compensation to be paid to members ofthe Independent Committee will be paid on a per meeting plusexpenses basis and will be allocated among the Funds in amanner that is considered by the Independent Committee tobe fair and reasonable to the Funds.

11. Within thirty days of the end of eachmonth in which one or more of the Funds purchases or sellssecurities of CIBC, a report shall be filed on SEDAR (or inrespect of the Pools, the internet website) contemplated byparagraph (l) below disclosing the name of each Fund thatpurchased or sold securities of CIBC during the month, thenumber or amount of CIBC securities purchased or sold by eachFund and the volume weighted average price paid or receivedfor the CIBC securities by each Fund.

AND WHEREAS pursuant to the System thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers pursuantto the Legislation is that:

1. the Public Funds and the Related Advisersare exempt, as the case may be, from the Investment Restrictionsso as to enable the Funds to invest, or continue to hold aninvestment in securities of CIBC;

2. the Pools and the Related Advisers areexempt, as the case may be, from the Pools' Investment Restrictionsso as to enable the Pools to invest, or continue to hold aninvestment in securities of CIBC; and

3. this Decision, as it relates to the jurisdictionof a Decision Maker, will terminate one year after the publicationin final form of any legislation or rule of that DecisionMaker dealing with mutual fund governance in a manner thatconflicts with or makes inapplicable any provision of thisDecision

provided that:

(a) the managers of the Funds have appointedthe Independent Committee to review the Funds' purchases,sales and continued holdings of securities of CIBC;

(b) the Independent Committee has at leastthree members, none of whom is an employee, director, officeror associate of (i) CIBC, (ii) the Related Advisers; or(iii) any associate or affiliate of CIBC or the RelatedAdvisers;

(c) the Independent Committee has a writtenmandate describing its duties and standard of care which,at a minimum, sets out the conditions of this Decision;

(d) the members of the Independent Committeeexercise their powers and discharge their duties honestly,in good faith and in the best interests of investors inthe Funds and, in doing so, exercise the degree of care,diligence and skill that a reasonably prudent person wouldexercise in the circumstances;

(e) none of the Funds relieves the membersof the Independent Committee from liability for loss thatarises out of a failure to satisfy the standard of careset out in paragraph (d);

(f) none of the Funds indemnifies the membersof the Independent Committee against legal fees, judgmentsand amounts paid in settlement as a result of a breach ofthe standard of care set out in paragraph (d);

(g) none of the Funds incurs the cost ofany portion of liability insurance that insures a memberof the Independent Committee for a liability for loss thatarises out of a failure to satisfy the standard of careset out in paragraph (d);

(h) the cost of any indemnification or insurancecoverage paid for by a manager of the Funds, or any associateor affiliate of a manager of the Funds to indemnify or insurethe members of the Independent Committee in respect of aloss that arises out of a failure to satisfy the standardof care set out in paragraph (d) is not paid either directlyor indirectly by the Funds;

(i) the Independent Committee reviews theFunds' purchases, sales and continued holdings of securitiesof CIBC on a regular basis, but not less frequently thanevery three months;

(j) the Independent Committee forms theopinion, at any time, after reasonable inquiry, that thedecisions made on behalf of each Fund by the Related Advisersor the Fund's portfolio sub-adviser to purchase, sell orcontinue to hold securities of CIBC were and continue tobe in the best interests of the Fund, and to:

(i) represent the business judgement ofthe Related Adviser or the Fund's portfolio sub-adviser,uninfluenced by considerations other than the best interestsof the Fund;

(ii) have been made free from any influenceby CIBC and without taking into account any considerationrelevant to CIBC; and

(iii) not exceed the limitations of theapplicable legislation.

(k) the determination made by the IndependentCommittee pursuant to paragraph (j) is included in detailedwritten minutes provided to the manager of the relevantFund not less frequently than every three months;

(l) the reports required to be filed pursuantto the Legislation with respect to every purchase and saleof securities of CIBC are filed on SEDAR in respect of therelevant mutual fund or, in respect of the Pools, the internetwebsite maintained in respect of the Pools;

(m) the Independent Committee advises theDecision Makers in writing of:

(i) any determination by it that the conditionset out in paragraph (j) has not been satisfied with respectto any purchase, sale or holding of securities of CIBC;

(ii) any determination by it that anyother condition of this Decision has not been satisfied;

(iii) any action it has taken or proposesto take following the determinations referred to above;and

(iv) any action taken, or proposed tobe taken, by the Related Adviser or a portfolio sub-adviserof the Funds in response to the determinations referredto above; and

(n) the existence, purpose, duties and obligationsof the Independent Committee, the names of its members,whether and how they are compensated by the Funds, the relationshipbetween parties related to the Fund and CIBC (includingpercentage of ownership) and the fact that the IndependentCommittee meets the requirements of the condition set outin paragraph (b) are disclosed in respect of the Pools,in a statement sent to clients and on the internet websitemaintained in respect of the Pools, and in respect of thePublic Funds:

(i) in a press release issued, and a materialchange report filed, prior to reliance on the Decision;

(ii) in item 12 of Part A of the simplifiedprospectus of the Public Funds; and

(iii) on CIBC's internet website.

February 6, 2003.

"Robert W. Korthals"                    "KerryD. Adams"

Schedule "A"

CIBC Funds

CM Funds

Talvest Funds

TAL Pools