Mutual Reliance Review System for ExemptiveRelief Applications -- Certain trades in shares by a mutualfund dealer, in its capacity as a group plan administrator ofan employee retirement savings program, made for or to programparticipants, exempted from the dealer registration requirementin clause 25(1)(a) of the Act -- Shares are common shares ofan affiliate of the employer -- Program participants are employees,former employees, spouses of employees, spouses of former employees,and related plans registered under the Income Tax Act (Canada).
Mutual Reliance Review System for ExemptiveRelief Applications -- Mutual fund dealer, acting as group planadministrator of employee retirement savings program, exemptedfrom "suitability" requirements in paragraph 1.5(b)of Rule 31-505 that would otherwise arise as a result of thedealer purchasing or selling common shares for or on behalfof program participants.
Applicable Ontario Statute
Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 25(1)(a) and 74(1).
Applicable Ontario Securities CommissionRule
Rule 31-505 Conditions of Registration, ss.1.5 and 4.1.
IN THE MATTER OF
THE CANADIAN SECURITIES LEGISLATIONOF
ALBERTA AND ONTARIO
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
FIDELITY INVESTMENTS CANADALIMITED
FORD MOTOR COMPANY OF CANADA,LIMITED
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Registration Exemption DecisionMaker") in each of Alberta and Ontario (the "Jurisdictions")has received an application (the "Registration ExemptionApplication") from Fidelity Investments Canada Limited("Fidelity") for a decision under the securities legislation(the "Legislation") of each of the Jurisdictions thatthe "dealer registration requirement" (the "DealerRegistration Requirement"), as such term is defined inNational Instrument 14-101 Definitions, shall not applyto certain trades in shares ("Common Shares") of commonstock of Ford Motor Company ("Ford U.S.") to be madeby Fidelity for or to persons (each, a "Program Participant")that are Employees, Spouses of Employees, Former Employees,Spouses of Former Employees, Employee EPSPs, Employee RRSPs,Employee Spouse RRSPs or Employee LIRAs (as such terms are definedbelow), in its capacity as a group plan administrator of theFord-CAW Savings Plan (the "Program") of Ford MotorCompany of Canada, Limited ("Ford Canada") (whichProgram includes the Employee EPSPs, Employee RRSPs, EmployeeSpouse RRSPs and Employee LIRAs);
AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor the Registration Exemption Application;
AND WHEREAS Fidelity has representedto the Decision Makers that:
1. Fidelity, a corporation continued underthe laws of Ontario, is registered in each of the Jurisdictionsas a dealer in the category of "mutual fund dealer"and is also registered as an "adviser" in the categoriesof "investment counsel" and "portfolio manager".Fidelity Retirement Services ("FRS") is the divisionof Fidelity currently responsible for servicing the GroupRetirement Clients (as defined below) (the "Group RetirementBusiness").
2. Fidelity has obtained relief (the "MFDARelief") pursuant to the Legislation of the Jurisdictions,exempting it from the requirements under the Legislation:(i) to be a member of the Mutual Fund Dealers Associationof Canada (the "MFDA") on or after July 2, 2002;and (ii) to file with the MFDA an application for membershipand corresponding fees for membership before the requireddate under the Legislation of the Jurisdictions.
3. Fidelity's registration under the Legislationas a "mutual fund dealer" has been restricted tocertain trades which are incidental to its principal business.The restricted trading activity includes trades by Fidelityto a participant in an employer-sponsored registered planor other savings plan (the "Group Retirement Clients")until the earlier of: (i) the assumption of such trading activityby Fidelity Intermediary Securities Company Limited ("FISCo"),a wholly-owned subsidiary of Fidelity; and (ii) December 31,2003.
4. For some time, Fidelity has been activelyengaged in a project to determine the most appropriate regulatoryplatform for its Group Retirement Business. Until recently,Fidelity's plan has been to transfer FRS to FISCo by December31, 2003. As part of its ongoing project, Fidelity is nowconsidering a possible change of plans but Fidelity does notexpect to be able to finalize such plans until later in 2003,and, if necessary, application(s) will be made at that timefor any necessary variations of existing related exemptiverelief or new exemptive relief.
5. Ford U.S. is a corporation incorporatedunder the laws of the State of Delaware.
6. Ford U.S. is not a reporting issuer (orthe equivalent) under the applicable securities legislationof any jurisdiction in Canada.
7. Ford Canada, a corporation incorporatedunder the laws of Ontario, is not a reporting issuer (or theequivalent) under the applicable securities legislation ofany jurisdictions in Canada.
8. Ford Canada is wholly-owned by Ford U.S.
9. The Common Shares are registered with theSecurities and Exchange Commission in the United States ofAmerica (the "USA") under the Securities ExchangeAct of 1934 and Ford U.S. is subject to the reporting requirementsthereunder.
10. The Common Shares are listed and postedfor trading on the New York Stock Exchange (the "NYSE").
11. Under the Program, Ford Canada selectsmutual funds that persons (each an "Employee") whoare employees of Ford Canada, and who participate in the Program,may purchase through payroll deductions or through lump-sumpayments.
12. Investments made by Employees under theProgram are made through the following plans (collectively,the "Component Plans"):
(i) an "employees profit sharing plan"(each, an "Employee EPSP"), as defined in theIncome Tax Act (Canada) (the "Tax Act"),that has been established for the benefit of persons whoare Employees;
(ii) "registered retirement savingsplans" (each, an "Employee RRSP"), as definedin the Tax Act, that have been established by or for thebenefit of persons who are Employees;
(iii) "registered retirement savingsplans" (each, an "Employee Spouse RRSP"),as defined in the Tax Act, that have been established byor for the benefit of persons (collectively, "Spouses")who are legally married to or are the "common law partners"(as defined in the Tax Act) of persons who are Employees;and
(iv) "locked-in retirement accounts"(each, an "Employee LIRA") registered with theCanada Customs and Revenue Agency that have been establishedby or for the benefit of persons who are Employees.
13. Under the Program, Spouses are also permittedto invest amounts in their Employee Spouse RRSPs in certainmutual funds offered through Fidelity.
14. Under the Program, it is proposed thatFidelity carry out the following activities:
(i) receive orders from Employees to purchaseCommon Shares (including Common Shares to be purchased uponthe automatic reinvestment of dividends paid in respectof Common Shares) through their EPSP, their Employee RRSP,their Employee Spouse RRSP or their Employee LIRA;
(ii) receive orders from Spouses to purchaseCommon Shares (including Common Shares to be purchased uponthe automatic reinvestment of dividends paid in respectof Common Shares) through their Employee Spouse RRSPs;
(iii) receive orders from Employees, andfrom persons ("Former Employees") that were, buthave since ceased to be, Employees, to sell Common Sharesheld on their behalf through their EPSP, their EmployeeRRSPs or their Employee LIRA;
(iv) receive orders from Spouses, FormerEmployees or persons (each, a "Spouse of a Former Employee")who are legally married to or are the "common law partners"(as defined in the Tax Act) of a Former Employee, to sellCommon Shares held through their Employee Spouse RRSPs;
(v) "match" the orders to purchaseCommon Shares, referred to in subparagraphs (i) or (ii),against orders to sell Common Shares, referred to in subparagraphs(iii) or (iv), with the offsetting purchases and sales (a"Matching Transaction") effected by way of bookentries in the corresponding accounts maintained by Fidelityunder the Program and the funds received in respect of thepurchase remitted by Fidelity to the vendor;
(vi) where purchases or sales of CommonShares cannot be effected in a Matching Transaction, andthe aggregate number of such Common Shares is less than50, if Fidelity deems it to be appropriate, Fidelity maysatisfy the purchase or sale order by, depending upon thecase, selling or purchasing the subject Common Shares asprincipal (a "Float Transaction");
(vii) transmit orders to purchase or sellCommon Shares, referred to above, which are not effectedin a Matching Transaction or a Float Transaction, for executionthrough:
(a) another dealer that is registeredunder the applicable securities legislation in each ofthe jurisdictions, where the order is received by Fidelityand received by the dealer, as a dealer in a categorythat permits it to act as a dealer for the subject trade;or
(b) another person or company that isoutside of Canada, for their execution of the order throughthe facilities of the NYSE or another stock exchange outsideof Canada, provided that the person or company is appropriatelylicensed to carry on the business of a broker/dealer underthe applicable securities legislation in the jurisdictionwhere the trade is executed;
(viii) maintain books and records in respectof the foregoing, reflecting, among other things: all relatedpayments, receipts, account entries and adjustments;
15. Records of Common Shares held under theProgram through the Component Plans will be maintained byFidelity, and the Common Shares will be held by a custodianthat is not affiliated with Fidelity, Ford U.S. or Ford Canada.
16. When an Employee becomes a Former Employee,the Former Employee, the Employee EPSP of the Former Employee,the Employee RRSP of the Former Employee, the Spouse of theFormer Employee, the Employee Spouse RRSP of the Former Employee,and the Employee LIRA of the Former Employee will not be permittedto make further purchases of Common Shares under the Program,other than Common Shares to be purchased upon the automaticreinvestment of dividends paid in respect of Common Sharesin the corresponding Component Plans, but, subject to timelimitations in certain cases, the foregoing will be permittedto continue to hold, through Fidelity, Common Shares previouslypurchased on their behalf under the Program, to instruct Fidelityfrom time to time to sell Common Shares then held on theirbehalf by Fidelity, or to transfer such Common Shares to anaccount with another dealer.
17. To participate in the Program, Employeesand Spouses must enrol through Fidelity by application, whichmay be completed: in writing; on the telephone, by way ofa recorded call; or, through the Internet, by way of secureaccess to Fidelity's website.
18. Employees and Spouses who enrol in theProgram will be required when completing the enrolment applicationto acknowledge that Fidelity will not be performing any "suitability"analysis with respect to any purchase or sale of Common Shareson their behalf, or on behalf of their Spouse, under the Program:by signing the application form, where the application iscompleted in writing; orally, where the application is completedon the telephone; or, by making the appropriate selectionon Fidelity's website, where the application is completedon the Internet.
19. No Program Participant will be chargedany trading commissions, fees, costs or other expenses inrespect of the purchase or sale of any Common Shares on behalfof the Program Participant under the Program.
20. Except for ascertaining the "suitability"of trades made under the Program, Fidelity will comply withall other conditions or other requirements under the Legislationthat would be applicable to it as a mutual fund dealer ifthe Common Shares were shares or units of a mutual fund, withrespect to any purchase, sale or holding of Common Shares,by Fidelity on behalf of Program Participants under the Program,including requirements relating to, but not limited to: capitalrequirements; record keeping; account supervision; segregationof funds and securities; confirmations of trades; "knowyour client" and statements of account.
AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Registration Exemption 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 theRegistration Exemption Decision has been met;
THE DECISION of the Decision Makers underthe Legislation is that the Dealer Registration Requirementcontained in the Legislation shall not apply to any trades madeby Fidelity to, or on behalf of, Program Participants, thatare referred to in paragraph 14, above, provided that:
A. in the case of each trade made in a Jurisdiction,Fidelity is, at the time of the trade, registered under theLegislation of the Jurisdiction as a dealer in the categoryof "mutual fund dealer", and, the trade is madeon behalf of Fidelity by a person that is registered underthe Legislation to trade shares or units of mutual funds onbehalf of Fidelity as a salesperson or officer;
B. in the case of any trades referred to insubparagraph 14(vii)(b):
(i) at the time of the trade, Ford U.S.is not a reporting issuer (or the equivalent) under theapplicable securities legislation in any jurisdiction ofCanada;
(ii) at the time of the acquisition of theCommon Shares by the selling Program Participant, therewas a de minimis market in Canada, where, for thesepurposes, there shall be a de minimis market in Canadaif, at the relevant time:
(a) persons or companies whose last addressas shown on the books of Ford U.S. was in Canada and whoheld Common Shares:
(i) did not hold Common Shares representingmore than 10 per cent of the outstanding Common Shares;and
(ii) did not represent in number morethan 10 per cent of the total number of holders of theCommon Shares; or
(b) persons or companies who were in Canadaand who beneficially owned Common Shares:
(i) did not beneficially own more than10 per cent of the outstanding Common Shares; and
(ii) did not represent in number morethan 10 per cent of the total number of holders of CommonShares; and
C. this Registration Exemption Decision willterminate on December 31, 2003.
June 6, 2003.
"Paul M. Moore"
"Harold P. Hands"
AND WHEREAS Fidelity has also made anapplication (the "Suitability Exemption Application")to the local securities regulatory authority or regulator (the"Suitability Exemption Decision Maker") for a decisionthat the requirements (the "Suitability Requirements")in the Legislation of each Jurisdiction to make enquiries ofeach Program Participant -- that would otherwise arise as aresult of Fidelity purchasing or selling Common Shares to orfor the Program Participant, as described in the RegistrationExemption Decision, above -- to determine (a) the general investmentneeds and objectives of the Program Participant; and (b) thesuitability of a proposed purchase or sale of Common Sharesfor the Program Participant, do not apply to Fidelity, subjectto certain terms and conditions;
AND WHEREAS under the System, the OntarioSecurities Commission is the principal regulator for this SuitabilityExemption Application;
AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Suitability Exemption 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 theSuitability Exemption Decision has been met;
THE DECISION of the Suitability ExemptionDecision Makers, pursuant to the Legislation, is that the SuitabilityRequirements of the Legislation shall not apply to Fidelityas a result of Fidelity purchasing or selling Common Sharesto or for Program Participants, as described in the above RegistrationExemption Decision, provided that, in the circumstances of eachsuch purchase or sale:
D. the Program Participant, or, in the caseof a Program Participant that is an EPSP, an Employee RRSP,an Employee Spouse RRSP or an Employee LIRA, the correspondingEmployee or Spouse, has given the corresponding acknowledgement,referred to in paragraph 18 of the above Registration ExemptionDecision;
E. Fidelity does not make any recommendationor give any investment advice with respect to the purchaseor sale; and
F. this Suitability Exemption Decision willterminate on December 31, 2003.
June 6, 2003.