Securities Law & Instruments

Headnote

NP 11-203 -- Approval of a change of control of a mutual fund manager -- Change of control not is not expected to affect the operation or administration of the Funds -- National Instrument 81-102 Mutual Funds.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, s. 5.5(2).

November 12 , 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

BLACKROCK INC. (the Filer)

AND

IN THE MATTER OF

BARCLAYS GLOBAL INVESTORS CANADA LIMITED

(the Manager) AND

THE INVESTMENT FUNDS LISTED IN SCHEDULE A

(collectively, the iShares Funds)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) to approve a change of control of the Manager, the manager of the Canadian-domiciled family of iShares Funds, in accordance with subsection 5.5(2) of NI 81-102 -- Mutual Funds (NI 81-102) (the Approval Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filer has provided notice that Section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than Ontario.

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 Filer:

1. The Manager is a corporation incorporated under the Ontario Business Corporations Act with its head office in Toronto, Ontario.

2. The Manager is the manager of the iShares Funds.

3. The Manager is also registered with the applicable securities commissions as: (i) portfolio manager in all of the provinces and territories of Canada; (ii) commodity trading manager in Ontario; and (iii) as exempt market dealer in Ontario and in Newfoundland and Labrador.

4. The iShares Funds are exchange traded funds. The iShares Funds listed in Schedule A are reporting issuers in all of the provinces and territories of Canada and distribute their securities pursuant to prospectuses. The iShares Funds are also subject to, among other laws and regulations, NI 81-102, National Instrument 81-106 -- Investment Fund Continuous Disclosure and National Instrument 81-107 -- Independent Review Committee for Investment Funds (NI 81-107).

5. Neither the Manager nor any of the iShares Funds is in default of applicable securities legislation of any province or territory of Canada.

6. Barclays Global Investors (BGI) is a leading global provider of exchange traded funds and institutional asset management, the parent legal entity of which is Barclays Global Investors UK Holdings Limited (BGI UK Holdings), an English company . BGI UK Holdings is an indirect subsidiary of Barclays plc, an English company. The Manager is an indirect subsidiary of BGI UK Holdings. At December 31, 2008, BGI had US$1.5 trillion of assets under management. BGI has over 3500 employees in 15 different jurisdictions and is a major presence in key global markets including the US, Europe, Asia and Australia.

7. The Filer is a Delaware corporation. Together with its affiliates (collectively BlackRock), it is one of the world's largest publicly traded investment management firms. At March 31, 2009, BlackRock had approximately US$1.3 trillion of assets under management. The BlackRock group manages assets on behalf of institutions and individuals worldwide through a variety of equity, fixed income, cash management and alternative investment products. Headquartered in New York, BlackRock has over 5500 employees in 21 jurisdictions and is a major presence in key global markets, including the US, Europe, Asia and Australia. As a result, BlackRock has considerable experience in the asset management and investment funds industry.

8. The Filer, Barclays plc and Barclays Bank plc have executed a definitive purchase agreement, dated June 16, 2009, pursuant to which BlackRock shall acquire the BGI group including its exchange traded fund platform, iShares (the BlackRock Transaction). The BlackRock Transaction will create a new asset management group operating under the name of BlackRock.

9. Upon closing of the BlackRock Transaction, while there will be no change in the immediate legal parent company of the Manager, the Manager will become an indirect subsidiary of the Filer, which will result in an indirect change of control of the Manager of the iShares Funds (the Manager Change of Control) for purposes of subsection 5.5(2) of NI 81-102.

10. The BlackRock Transaction is not expected to have any material impact on the iShares Funds or on the unitholders of the iShares Funds.

11. There are no current plans to change, as a result of the BlackRock Transaction, the current officers and directors of the Manager or the sub-adviser of the iShares Funds, Barclays Global Investors, N.A., and its personnel, who are responsible for the investment management activities of the iShares Funds, subject to the policies, control and supervision of the Manager.

12. The Manager Change of Control is not expected to affect the operation or administration of the iShares Funds, including their investment objectives or strategies.

13. The BlackRock Transaction will not impact the financial stability of the Manager.

14. Upon the Manager Change of Control, all then current members of the independent review committee for the iShares Funds will cease to be members of the independent review committee by operation of section 3.10(1)(c) of NI 81-107. It is expected that immediately following the Manager Change of Control, the independent review committee will be reconstituted with certain existing and new members as contemplated in the commentary to Sections 3.3(5) and 3.10 of NI 81-107.

15. News releases with respect to the BlackRock Transaction were issued by BlackRock on June 11 and June 16, 2009, and by the iShares Funds on June 16, 2009, and the related material change report was filed on SEDAR on June 24, 2009. Amendments to the prospectuses of the iShares Funds dated November 7, 2008 and April 17, 2009 were filed on June 22, 2009.

16. Notice of change of control of the Manager was sent to security holders of the iShares Funds pursuant to Section 5.8 of NI 81-102 on October 1, 2009.

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 Approval Sought is granted.

"Rhonda Goldberg"
Manager, Investment Funds Branch
Ontario Securities Commission

 

Schedule A

List of iShares Funds

iShares Canadian Equity Funds
iShares CDN S&P®/TSX® 60 Index Fund ("XIU")
iShares CDN S&P/TSX Capped Composite Index Fund ("XIC")
iShares CDN S&P/TSX Completion Index Fund ("XMD")
iShares CDN S&P/TSX SmallCap Index Fund ("XCS")
iShares CDN S&P/TSX Capped Energy Index Fund ("XEG")
iShares CDN S&P/TSX Capped Financials Index Fund ("XFN")
iShares CDN S&P/TSX Capped Information Technology Index Fund ("XIT")
iShares CDN S&P/TSX Capped REIT Index Fund ("XRE")
iShares CDN S&P/TSX Capped Materials Index Fund ("XMA")
iShares CDN S&P/TSX Income Trust Index Fund ("XTR")
iShares CDN Dow Jones Canada Select Dividend Index Fund ("XDV")
iShares CDN Dow Jones Canada Select Growth Index Fund ("XCG")
iShares CDN Dow Jones Canada Select Value Index Fund ("XCV")
iShares CDN Jantzi Social Index Fund ("XEN")
 
iShares Fixed Income Funds
iShares CDN DEX Short Term Bond Index Fund ("XSB")
iShares CDN DEX All Corporate Bond Index Fund ("XCB")
iShares CDN DEX All Government Bond Index Fund ("XGB")
iShares CDN DEX Long Term Bond Index Fund ("XLB")
iShares CDN DEX Universe Bond Index Fund ("XBB")
iShares CDN DEX Real Return Bond Index Fund ("XRB")
 
iShares International Funds
iShares CDN S&P/TSX Global Gold Index Fund ("XGD")
iShares CDN MSCI® Emerging Markets Index Fund ("XEM")
iShares CDN MSCI World Index Fund ("XWD")
 
iShares Currency Hedged International Funds
iShares CDN S&P 500 Hedged to Canadian Dollars Index Fund ("XSP")
iShares CDN MSCI EAFE® 100% Hedged to CAD Dollars Index Fund ("XIN")
iShares CDN Russell 2000® Index -- Canadian Dollar Hedged Index Fund ("XSU")
 
iShares Portfolio Builder Series
iShares Conservative Core Portfolio Builder Fund ("XCR")
iShares Growth Core Portfolio Builder Fund ("XGR")
iShares Global Completion Portfolio Builder Fund ("XGC")
iShares Alternatives Completion Portfolio Builder Fund ("XAL")