GCIC Ltd. and Scotia Asset Management L.P.

Headnote

National Policy 11-203, Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted from conflict of interest provisions to allow mutual funds to purchase equity securities pursuant to offerings made in the United States in which a related dealer acts as underwriter -- relief required as growing status of filer's related dealers in equity underwriting activities in the United States was limiting ability of funds to acquire securities in the United States pursuant to a distribution -- all purchases subject to independent review committee approval and securities must be distributed pursuant to prospectus qualified in the United States or by private placement of securities of a reporting issuer in the United States.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 4.1 and 19.1.

January 31, 2013

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

GCIC LTD. ("GCICL" or a "Filer") and

SCOTIA ASSET MANAGEMENT L.P.

("SAM" or a "Filer" and, collectively with GCICL, the "Filers")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers on behalf of the existing mutual funds subject to National Instrument 81-102 -- Mutual Funds ("NI 81-102") for which a Filer or an affiliate or associate of a Filer acts as manager or portfolio adviser or both, and any other mutual funds subject to NI 81-102 which may be created in the future for which a Filer or an affiliate or associate of a Filer may act as manager or portfolio advisor or both (each a "Fund" and collectively the "Funds") for a decision (the "Exemption Sought") under the securities legislation of the Jurisdiction of the principal regulator ("Legislation") exempting the Funds from the prohibition in subsection 4.1(1) of NI 81-102 (the "Prohibition") to enable the Funds to invest in equity securities (the "Securities") of an issuer that is a registrant in the United States but a non-reporting issuer in the Jurisdictions (as defined below) during the period of the distribution (the "Distribution") and/or during the period of 60 days after the Distribution (the "60-Day Period"), notwithstanding that an associate or affiliate of a Filer acts as an underwriter in the Distribution.

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

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

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the "Jurisdictions").

Interpretation

Unless otherwise defined herein, terms defined in National Instrument 14-101 -- Definitions, NI 81-102 and National Instrument 81-107 -- Independent Review Committee for Investment Funds ("NI 81-107") have the same meaning in this application.

Representations

1. GCICL is a corporation existing under the laws of the Province of Ontario, is registered with the OSC as a portfolio manager in the category of adviser, is further registered in that category in each of British Columbia, Alberta, Manitoba, Saskatchewan, Quebec, New Brunswick, Prince Edward Island, Nova Scotia and the Northwest Territories and is registered as a commodity trading manager and investment fund manager with the OSC.

2. SAM is a limited partnership established under the laws of Ontario and is registered as a portfolio manager, investment fund manager, exempt market dealer and commodity trading manager in Ontario; as a portfolio manager and exempt market dealer in British Columbia, Alberta, Manitoba, Quebec, New Brunswick, Nova Scotia, and Newfoundland and Labrador; and as a portfolio manager in Saskatchewan, Prince Edward Island and Yukon.

3. GCICL and SAM are affiliates.

4. A Filer, or an affiliate or associate of a Filer, is or will be the manager and/or portfolio adviser of the Funds. In addition, from time to time, third parties who are registered as portfolio managers may act as portfolio advisers to a Fund.

5. Each of the Funds is or will be an open-ended mutual fund trust or corporation established under the laws of the Province of Ontario. The securities of each of the Funds are or will be qualified for distribution in the Jurisdictions pursuant to simplified prospectuses and annual information forms prepared and filed in accordance with the securities legislation of the Jurisdictions.

6. Each Filer is or will be a "dealer manager" with respect to the Funds for which they act as a portfolio manager and/or portfolio advisor and each Fund is or will be a "dealer managed mutual fund", as such terms are defined in Section 1.1 of NI 81-102.

7. Neither the Filers nor any existing Fund is in default of securities legislation in any of the Jurisdictions.

8. Each Filer has appointed or will appoint an independent review committee ("IRC") under NI 81-107 for each of the Funds that they manage.

9. At the time of purchase by a Fund, the Securities will either be (i) equity securities of a registrant in the United States (or an entity that will become a registrant in the United States at the time of purchase of the Securities by the Fund) or (ii) convertible securities, such as special warrants, which automatically permit the holder to purchase, convert or exchange such convertible securities into other equity securities of the issuer once such other equity securities are listed and traded on an exchange.

10. The investment objective of each Fund permits or will permit an investment in the Securities.

11. Each Filer is currently an affiliate of Scotia Capital Inc. (USA) and Scotia Capital Inc. and may be an associate or affiliate of one or more other dealers (each, a Related Underwriter), who may act as an underwriter in a Distribution. The Related Underwriters carry on investment banking business in the United States and/or Canada.

12. Since February 4, 2011 there have been several Distributions in the United States in which a Related Underwriter acted and in which the Funds could not purchase Securities during the Distribution or during the 60-Day Period because the Distribution was not made by a prospectus filed with one or more securities regulatory authorities in a Jurisdiction or the issuers were not reporting issuers in a Jurisdiction.

13. It is anticipated that the Related Underwriters will remain active in the United States equity markets and, without the Exemption Sought being granted, the Funds will be restricted from purchasing Securities during the Distributions and 60-Day Periods and may therefore miss further investment opportunities.

14. Each Filer considers that the Funds have been negatively impacted by not being able to purchase during a Distribution, or in the 60-Day Period, Securities that are consistent with its investment objective. Forgoing participation in these investment opportunities represents a significant opportunity cost for the relevant Funds, as they are being denied access to investment opportunities as a result of the coincidental participation of a Related Underwriter in the transaction.

15. The Prohibition is detrimental for the Funds in so far as it also serves to prevent the Funds from supplementing existing positions, when issuers that the Funds may already hold securities in, are raising capital by distributing additional securities. This prevents the Funds from maintaining their strategic percentage holdings in a given issuer relevant to the overall portfolio holdings.

16. The prejudice that results for a Fund that is restricted from purchasing Securities is that the portfolio manager's discretion with respect to managing the portfolio is negatively impacted because if he/she cannot make appropriate commitments or expressions of interest in respect of Securities, he/she can also not make appropriate decisions with respect to other securities of a Fund. The prejudice that results for a Fund also puts the Funds at a competitive disadvantage to almost all other Canadian funds since the Filers are among the few firms with a related party dealer that is involved on a frequent basis in these types of underwritings.

17. The Funds have generally, to date, been made aware of Distributions and invited to participate by an underwriter which is not a Related Underwriter.

18. Despite the affiliation between a Filer and the Related Underwriter, they operate independently of each other. In particular, the investment banking and related dealer activities of the Related Underwriter and the investment portfolio management activities of each Filer on behalf of the Funds are separated by "ethical" walls. Accordingly, no information flows from one to the other concerning their respective business operations or activities generally, except in the following or similar circumstances:

(a) in respect of compliance matters (for example, a Filer and the Related Underwriter may communicate to enable the Filer to maintain an up to date restricted-issuer list to ensure that the Filer complies with applicable securities laws); and

(b) a Filer and the Related Underwriter may share general market information such as discussion on general economic conditions, bank rates, etc.

19. The Funds will not be required or obligated to purchase any Securities under a Distribution or during the 60-Day Period

20. A Distribution will be made by means of a prospectus, or similar public offering document, (a "Public Offering"), or by means of a private placement ( a "Private Placement") in the United States. The Securities issued in the Distribution will be listed on a stock exchange that is a "recognized stock exchange" within the meaning of section 248(1) of the Income Tax Act (Canada) (a "Recognized Exchange").

21. A Distribution may also be made in the Jurisdictions by Private Placement.

22. The Funds would not be restricted by the Prohibition if, in accordance with subsection 4.1(4) of NI 81-102, certain conditions are met, including that the distribution is made by a prospectus filed in one or more of the Jurisdictions and the IRC of the Funds has approved the transaction in accordance with subsection 5.2(2) of NI 81-107.

23. As a prospectus will not be filed in any Jurisdiction in connection with a Distribution, the Funds cannot rely on the exemption from the Prohibition contained in subsection 4.1(4) of NI 81-102. However, the issuer of the Distribution will be, or will concurrently with the closing of the Distribution become, a registrant in the United States (and will therefore be required to maintain a continuous disclosure record that is publicly available as it would be required to if it was a reporting issuer in a Jurisdiction) and the Filers will comply with subparagraphs 4.1(4)(a), (c)(ii) and (d) of NI 81-102 when purchasing Securities.

24. The Filers previously received exemptions from the Prohibition in connection with Distributions by The Williams Companies, Inc. and The Carlyle Group L.P. in decisions dated April 13, 2012 and April 26, 2012 respectively. In most Distributions, however, a Related Underwriter's involvement will not be known by a Filer, or an associate or affiliate of a Filer, sufficiently long enough in advance to make an application for relief on a case-by-case basis.

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 Exemption Sought is granted provided that:

(i) the investment will be in compliance with the investment objectives of the Fund;

(ii) the Securities issued in the Distribution must be listed on a Recognized Exchange;

(iii) if the Securities are acquired in the 60-Day Period, they must be acquired on a Recognized Exchange;

(iv) the IRC of the Fund will have approved the investment in accordance with subsections 4.1(4)(a) of NI 81-102 and 5.2(2) of NI 81-107;

(v) the Fund complies with paragraph 4.1(4)(d) of NI 81-102; and

(vi) appropriate disclosure of the terms of the Exemption Sought is made.