Subsection 38(1) of the Commodity Futures Act(Ontario) (the CFA) - relief from the registration requirementsof paragraph 22(1)(b) of the CFA granted to extra-provincialadvisers in respect of the provision of advisory services relatingto futures contracts to mutual funds that do not have an addressin Ontario, subject to certain terms and conditions.
Commodity Futures Act, R.S.O. 1990. c. C.20.,as am. s. 22(1)(b), s. 38(1).
IN THE MATTER OF
THE COMMODITY FUTURES ACT
R.S.O. 1990, CHAPTER C.20,AS AMENDED
IN THE MATTER OF
DIMENSIONAL FUND ADVISORSCANADA INC.
UPON the application of Dimensional FundAdvisors Canada Inc. (the Applicant) to the Ontario SecuritiesCommission (the Commission) for a ruling under subsection 38(1)of the CFA that the Applicant, affiliates of the Applicant (theAffiliates) and their respective directors, officers and employeesare not subject to the requirements of paragraph 22(1)(b) ofthe CFA with respect to advice provided to mutual funds (collectively,the Funds) managed by the Applicant with respect to commodityfutures contracts and commodity futures options;
AND UPON considering the applicationand the recommendation of the staff of the Commission;
AND UPON the Applicant having representedto the Commission that:
1. The Applicant is a corporation incorporatedunder the Canada Business Corporations Act. The headoffice of the Applicant is located in British Columbia. TheApplicant does not have an address in Ontario.
2. The head offices of the Affiliates areor will be located outside of Canada. None of the Affiliateshave an address in Ontario.
3. The Applicant is registered as an adviserin the category of portfolio manager under the SecuritiesAct (British Columbia) (the BCSA). This registration willpermit the Applicant to provide advice in British Columbiawith respect to securities (including futures and options)and exchange contracts within the meaning of the BCSA.
4. The Affiliates are or will be registeredor otherwise qualified under applicable laws in the UnitedStates or in the jurisdiction where their head office is locatedto provide investment counselling and portfolio managementservices.
5. The Applicant is the manager and principalportfolio advisor of the Funds. The head office of each ofthe Funds is located in British Columbia. None of the Fundshas an address in Ontario.
6. Securities of the Funds will be distributedin Ontario either pursuant to a simplified prospectus filedwith the Commission or pursuant to exemptions from the prospectusrequirements under the Securities Act (Ontario) (theOSA).
7. The Affiliates will be the sub-advisersto the Applicant with respect to the Funds. The Affiliateswish to advise the Funds with respect to commodity futurescontracts and commodity futures options within the meaningof the CFA.
8. The obligations of the Affiliates are orwill be set out in a written agreement with the Applicant.
9. The Applicant has or will contractuallyagree with the Funds to be responsible for any loss to theFunds that arises out of the failure of any Affiliate to:
(a) exercise the powers and discharge theduties of its office honestly, in good faith and in thebest interests of the Funds; or
(b) exercise the degree of care, diligenceand skill that a reasonably prudent person would exercisein the circumstances
(the Assumed Obligations).
10. The Applicant cannot be relieved by theFunds or the Funds' securityholders from its responsibilityfor any liability arising under the Assumed Obligations.
AND WHEREAS paragraph 22(1)(b) of theCFA prohibits a person or company from acting as an adviserunless the person is registered as an adviser, or is registeredas a partner or an officer of a registered adviser and is actingon behalf of a registered adviser, and the registration is inaccordance with the CFA and the regulations;
AND UPON the Commission being satisfiedthat to make this ruling would not be prejudicial to the publicinterest;
IT IS ORDERED pursuant to subsection38(1) of the CFA that the Applicant, the Affiliates and theirrespective directors, officers and employees are not subjectto the requirement of paragraph 22(1)(b) of the CFA in respectof the advice they provide to the Funds, provided that:
(a) all advice by the Applicant and the Affiliatesto the Funds is given and received, or portfolio managementservices are provided, outside of Ontario;
(b) the Applicant remains registered underthe BCSA and permitted to provide advice in British Columbiawith respect to exchange contracts;
(c) the Applicant, the Affiliates and theFunds continue to not have addresses in Ontario;
(d) the obligations of the Affiliates areset out in a written agreement with the Applicant;
(e) the Applicant remains responsible to theParticipating Clients for the Assumed Obligations; and
(f) this order shall terminate three yearsfrom the date of the order.
September 5, 2003.
"Paul M. Moore"
"Wendell S. Wigle"