Canadian Life Companies Split Corp. and Quadravest Capital Management Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Investment fund, and its manager, exempted from the dealer registration requirement for certain trading activities to be carried out in connection with a rights offering by the investment fund -- Trading activities to consist of the distribution of a rights offering circular, and rights to acquire units of the fund, to existing holders of securities of the fund, and the subsequent distribution of units to holders of rights, upon their exercise, through an appropriately registered dealer.

Applicable Legislative Provisions

Securities Act, R.S.O., c. S.5, as am., s. 25(1) and 74(1).

Multilateral Instrument 11-102 Passport System, s. 4.7(1).

National Instrument 45-101 Rights Offerings.

National Instrument 81-102 Mutual Funds.

National Instrument 45-106 Prospectus and Registration Exemptions, ss. 2.1, 3.1, 3.42, 8.5.

February 1, 2011

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

CANADIAN LIFE COMPANIES SPLIT CORP.

(THE FUND) AND

QUADRAVEST CAPITAL MANAGEMENT INC.

(THE MANAGER)(COLLECTIVELY, THE FILERS)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting the Filers from the dealer registration requirement in the Legislation in respect of certain trades (the Rights Offering Activities) to be carried out by the Manager, on behalf of the Fund, in connection with a proposed distribution (the Rights Offering) of rights (the Rights) to acquire units of the Fund (the Units), to be made in Ontario and each of the Passport Jurisdictions (as defined below) pursuant to a rights offering circular (the Rights Circular), in reliance upon the prospectus exemption (the "rights offering prospectus exemption") contained in section 2.1 [Rights offering] of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106).

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

1. the Ontario Securities Commission is the principal regulator for this application; and

2. each 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 British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut (collectively, the Passport Jurisdictions).

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 Filers:

1. The Fund is a corporation incorporated under the laws of Ontario. The Fund is a reporting issuer in each of the provinces and territories of Canada, and is not in default of the securities legislation in any jurisdiction.

2. The Manager acts as the investment fund manager for the Fund.

3. The head office of each of the Filers is located in Toronto, Ontario.

4. While the Fund is technically considered to be a mutual fund under the applicable securities legislation of the provinces and territories of Canada, it is not a conventional mutual fund and has obtained exemptions from certain requirements of National Instrument 81-102 Mutual Funds.

5. The authorized capital of the Fund consists of an unlimited number of Preferred Shares (the Preferred Shares), an unlimited number of Class A Shares (the Class A Shares), and 1,000 Class B Shares. The Preferred Shares and Class A Shares are listed and posted for trading on the Toronto Stock Exchange (the TSX). The Preferred Shares and the Class A Shares are issued only on the basis that an equal number of Preferred Shares and Class A Shares will be issued and outstanding at all times. Each Unit comprises one Preferred Share and one Class A Share.

6. The Fund is subject to certain investment restrictions that, among other things, limit the equity securities and other securities that the Fund may acquire for its investment portfolio. The Fund may write call options and put options in accordance with its investment objectives, investment guidelines and investment restrictions.

7. The investment objectives of the Fund are to: (i) provide holders of Preferred Shares with fixed cumulative preferential monthly cash dividends, (ii) provide holders of Class A Shares with regular monthly cash distributions, and (iii) return the original issue price of the Preferred Shares and Class A Shares at the time of the redemption of such shares.

8. The investment portfolio of the Fund now consists, and will consist, primarily of shares of the following publicly traded Canadian life insurance companies (each of whose shares will generally represent no less than 10 percent and no more than 30 percent of the net asset value (NAV) of the Fund): Great-West Lifeco Inc, Industrial Alliance Insurance and Financial Services Inc., Manulife Financial Corporation, and Sun Life Financial Inc. Up to 20 percent of the NAV of the Fund may be invested in equity securities of foreign life insurance companies or other Canadian or foreign financial services corporations.

9. On April 18, 2005 and on May 4, 2005, the Fund closed its initial public offering of Preferred Shares and Class A Shares pursuant to a (final) prospectus dated March 30, 2005. On March 9, 2006 and on March 29, 2006, the Fund issued additional Preferred Shares and Class A Shares pursuant to a (final) long form prospectus dated February 27, 2006. On January 15, 2010, the Fund issued to Class A Shareholders warrants to subscribe for and purchase Units, pursuant to a (final) short form prospectus dated January 4, 2010.

10. The Fund does not engage in the continuous distribution of its securities.

11. Under the Rights Offering, each holder of Class A Shares, as at a specified record date, will be entitled to receive, for no consideration, one Right for each Class A Share held by the holder.

12. Holders of the Rights will be entitled, upon their exercise of the Rights, to subscribe for Units, pursuant to subscription privileges provided for in the Rights, at a subscription price to be specified in the Rights Circular. Four Rights will entitle the holder to subscribe for one Unit under a basic subscription privilege. Holders of Rights who exercise their Rights under the basic subscription privilege may also subscribe, pro rata, for additional Units that are not subscribed for by other holders under the basic subscription privilege, pursuant to the terms of an additional subscription privilege. The term for the exercise of the Rights (including both the basic subscription privilege and additional subscription privilege) will not exceed 90 days after the acceptance date, as defined under National Instrument 45-101 Rights Offerings.

13. The Fund has applied to list on the TSX the Rights to be distributed under the Rights Offering.

14. The Rights Offering Activities will consist of:

(a) the distribution of the Rights Circular and the issuance of Rights to holders of Class A Shares (as at the record date specified in the Rights Circular), after the Rights Circular has been filed under the securities legislation of Ontario and each of the Passport Jurisdictions and the applicable requirements of the rights offering exemption have been satisfied; and

(b) the distribution of Units to holders of the Rights, upon the exercise of the Rights by the holders, through a registered dealer that is registered in a category that permits the registered dealer to make this distribution.

15. The Fund is in the business of trading by virtue of its portfolio investing and trading activities. As a result, its capital raising activities, including the Rights Offering, would require the Filers to register as a dealer in the absence of this decision (or another available exemption from the dealer registration requirement).

16. Section 8.5 NI 45-106 provides that, after March 26, 2010, the exemptions from the dealer registration requirements set out in sections 3.1 [Rights offering] and section 3.42 [Conversion, exchange, or exercise] of NI 45-106 no longer apply.

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 Fund, and Manager acting on behalf of the Fund, are not subject to the dealer registration requirement in respect of the Rights Offering Activities.