Securities Law & Instruments

Headnote

Subsection 78(1) of the Commodity Futures Act (Ontario) -- Revocation of the previous order granting relief from the adviser registration requirements of subsection 22(1)(b) of the CFA to extra-provincial advisers in respect of the provision of advisory services relating to futures contracts to funds that do not have an address in Ontario, subject to certain terms and conditions.

Section 80 of the Commodity Futures Act (Ontario) -- Relief from the adviser registration requirements of subsection 22(1)(b) of the CFA granted to extra-provincial advisers in respect of the provision of advisory services relating to futures contracts to funds that do not have an address in Ontario, subject to certain terms and conditions. Relief mirrors exemption available in sections 7.4 and 7.5 of OSC Rule 35-502 Non-Resident Advisers (Rule 35-502) made under the Securities Act (Ontario).

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 22(1)(b), 78, 80.

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

OSC Rules Cited

Rule 35-502 Non Resident Advisers, ss. 7.4, 7.5.

IN THE MATTER OF

THE COMMODITY FUTURES ACT,

R.S.O. 1990, CHAPTER C.20, AS AMENDED

(the CFA)

AND

IN THE MATTER OF

DIMENSIONAL FUND ADVISORS CANADA ULC

 

ORDER

(Section 80 and Subsection 78(1) of the CFA)

UPON the application (the Application) of Dimensional Fund Advisors Canada ULC (the Applicant) to the Ontario Securities Commission (the Commission) for an order (the Order):

(a) pursuant to subsection 78(1) of the CFA, revoking the exemption order granted by the Commission to the Applicant (then called Dimensional Fund Advisors Canada Inc.), on August 29, 2006; and

(b) pursuant to section 80 of the CFA, that the adviser registration requirement in the CFA (as defined below) shall not apply to the Applicant and affiliates of the Applicant (the Affiliates) and their respective directors, officers and employees acting as advisers on its behalf where the Applicant or the Affiliates act as an adviser in respect of Contracts (as defined below) in connection with the Applicant acting as an adviser to the Funds (as defined below), subject to certain terms and conditions;

AND WHEREAS, for the purposes hereof, the following terms shall have the following meanings:

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

"adviser registration requirement in the CFA" means the provisions of section 22 of the CFA that prohibit a person or company from acting as an adviser unless the person or company satisfies the applicable provisions of section 22 of the CFA;

"Contract" means a commodity futures contract or a commodity futures option, in each case, as defined in the CFA;

"Funds" means the mutual funds managed by the Applicant;

AND WHEREAS any other terms used in the Order that are defined in the Act, and not otherwise defined in the Order or in the CFA, shall have the same meaning as in the Act, unless the context otherwise requires;

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

AND UPON the Applicant having represented to the Commission that:

1. The Applicant is a corporation continued under the Nova Scotia Companies Act. The head office of the Applicant is located in British Columbia. The Applicant does not have an address in Ontario.

2. The head offices of the Affiliates are or will be located outside of Canada. None of the Affiliates have an address in Ontario.

3. The Applicant is registered as an adviser in the category of portfolio manager under the Securities Act (British Columbia) (the BCSA). This registration permits the Applicant to provide advice in British Columbia with respect to securities (including futures and options) and exchange contracts within the meaning of the BCSA.

4. The Affiliates are or will be registered or otherwise qualified under applicable laws in the United States or in the jurisdiction where their head office is located to provide investment counselling and portfolio management services.

5. The Applicant is the manager and principal portfolio adviser of the Funds. The head office of each of the Funds is located in British Columbia. None of the Funds has an address in Ontario.

6. Securities of the Funds will be distributed in Ontario either pursuant to a simplified prospectus filed with the Commission or pursuant to exemptions from the prospectus requirements under the Act.

7. The Affiliates will be the sub-advisers to the Applicant with respect to the Funds. The Affiliates wish to advise the Funds with respect to Contracts within the meaning of the CFA.

8. The obligations of the Affiliates are or will be set out in a written agreement with the Applicant.

9. The Applicant has or will contractually agree with the Funds to be responsible for any loss to the Funds that arises out of the failure of any Affiliate to:

(a) exercise the powers and discharge the duties of its office honestly, in good faith and in the best interests of the Funds; or

(b) exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances;

(the Assumed Obligations).

10. The Applicant cannot be relieved by the Funds or the Funds' securityholders from its responsibility for any liability arising under the Assumed Obligations.

11. On August 29, 2006, the Commission granted the Applicant (then called Dimensional Fund Advisors Canada Inc.), the Affiliates and their respective directors, officers and employees an exemption from the adviser registration requirement in the CFA where the Applicant acts as an adviser in respect of Contracts in connection with the Applicant acting as an adviser to the Funds (the Previous Order). The Previous Order is scheduled to expire on August 29, 2009.

AND WHEREAS paragraph 22(1)(b) of the CFA prohibits a person or company from acting as an adviser unless the person is registered as an adviser, or is registered as a partner or an officer of a registered adviser and is acting on behalf of a registered adviser, and the registration is in accordance with the CFA and the regulations;

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

IT IS ORDERED, pursuant to subsection 78(1) of the CFA, that the Previous Order is revoked; and

IT IS FURTHER ORDERED pursuant to section 80 of the CFA, that the Applicant, the Affiliates and their respective directors, officers and employees shall not be subject to the adviser registration requirement in the CFA where the Applicant acts as an adviser in respect of Contracts in connection with the Applicant acting as an adviser to the Funds, provided that:

(a) all advice by the Applicant and the Affiliates to the Funds is given and received, or portfolio management services are provided, outside of Ontario;

(b) the Applicant remains registered under the BCSA and permitted to provide advice in British Columbia with respect to exchange contracts;

(c) the Applicant, the Affiliates and the Funds continue to not have addresses in Ontario;

(d) the obligations of the Affiliates are set out in a written agreement with the Applicant;

(e) the Applicant remains responsible to the Funds or the Funds' securityholders for the Assumed Obligations; and

(f) this order shall terminate three years from the date of the Order.

August 21, 2009.

"James E. A. Turner"
Commissioner
Ontario Securities Commission
 
"Paulette L. Kennedy"
Commissioner
Ontario Securities Commission