Multilateral Instrument 11-102 Passport System -- National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 33-109 Registration Information (NI 33-109) -- relief from certain filing requirements of NI 33-109 in connection with a bulk transfer of business locations and registered and non-registered individuals pursuant to an amalgamation in accordance with section 3.4 of Companion Policy 33-109CP to NI 33-109.
Applicable Legislative Provisions
Multilateral Instrument 11-102 Passport System.
National Instrument 33-109 Registration Information and Companion Policy 33-109CP.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.
May 22, 2015
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 STERLING MUTUALS INC. (Sterling Mutuals) AND ARMSTRONG & QUAILE ASSOCIATES INC. (A&Q) (the Filers)
The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of Ontario (the Legislation) for relief from the requirements contained in sections 2.2, 2.3, 2.5, 3.2 and 4.2 of National Instrument 33-109 Registration Information (Nl 33-109) pursuant to section 7.1 of N1 33-109 to allow the bulk transfer of dealing representatives, permitted individuals and business locations from A&Q to Amalco (as defined below) (the Bulk Transfer) effective the Closing Date (as defined below) in accordance with section 3.4 of the Companion Policy to NI 33-109 (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application);
(i) the Ontario Securities Commission is the principal regulator for this application; and
(ii) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia, Saskatchewan, Manitoba, Quebec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Yukon and Northwest Territories.
Terms defined in National Instrument 14-101 Definitions and Ml 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filers:
1. A&Q is a company existing under the laws of Ontario with its head office located in Waterloo, Ontario. A&Q is a member of the Mutual Fund Dealers Association of Canada (MFDA) and is registered as a dealer in the category of mutual fund dealer in accordance with the securities legislation in all of the provinces of Canada and Nunavut and is registered as a dealer in the category of exempt market dealer in the provinces of Ontario, Alberta, New Brunswick, Newfoundland & Labrador and Saskatchewan.
2. A&Q is in compliance with all of the MFDA's requirements and is not in default of the securities legislation in any of the jurisdictions where it is registered.
3. Sterling Mutuals is a company existing under the laws of Ontario with its head office located in Windsor, Ontario. Sterling Capital Management Inc. (Sterling Capital), a company existing under the laws of Ontario, owns 100% of the issued and outstanding voting shares of Sterling Mutuals. Sterling Mutuals is a member of the MFDA and is registered as a dealer in the category of mutual fund dealer in accordance with securities legislation in all the provinces of Canada, and is registered as a dealer in the category of exempt market dealer in the provinces of Ontario, Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland & Labrador, Nova Scotia and Saskatchewan.
4. Sterling Mutuals is in compliance with all of the MFDA's requirements and is not in default of the securities legislation in any of the jurisdictions where it is registered.
The Share Transfer and the Amalgamation
5. Subject to obtaining the necessary regulatory approvals and pursuant to an amended and restated share purchase agreement dated as of April 27, 2015, Sterling Capital will acquire, indirectly, all of the shares of A&Q and, immediately thereafter on the same day, Sterling Mutuals and A&Q will amalgamate and the amalgamated company will continue as "Sterling Mutuals Inc." (Amalco).
6. Amalco will retain Sterling Mutuals' head office and National Registration Database (NRD) number and Amalco's registration will encompass the registration categories and jurisdictions of both Sterling Mutuals and A&Q immediately prior to the amalgamation.
7. On May 14, 2015, the MFDA issued a letter approving the (i) indirect acquisition by Sterling Capital of all of the shares of A&Q; and (ii) the amalgamation of Sterling Mutuals and A&Q.
8. It is anticipated that the share transfer and the amalgamation will be completed within five business days of receiving all required regulatory approvals (the Closing Date).
9. On the Closing Date, the registration of all dealing representatives and permitted individuals of A&Q (Transferred Individuals), in addition to all business locations, will be transferred to Amalco on NRD.
10. As of and from the Closing Date, the Transferred Individuals will carry on the same registerable activities as they conducted with A&Q.
11. Effective on the Closing Date, Amalco will carry on the same business as the Filers and all of the registerable activities of the Filers will be carried out by Amalco. Subject to obtaining the Exemption Sought, no disruption in the services provided by the Filers to their clients will result further to the amalgamation.
12. Given the number of Transferred Individuals and business locations transferring from A&Q to Amalco, it would be unduly time consuming and difficult to transfer the registration of each Transferred Individual and each business location through NRD, in accordance with NI 33-109, if the Exemption Sought is not granted.
13. The Bulk Transfer will ensure that the transfer of the affected individuals and business locations occurs effective as of the Closing Date in order to ensure that there is no interruption of registration and service to clients.
14. The Exemption Sought complies with the requirements of, and the reasons for, a bulk transfer as set out in section 3.4 of the Companion Policy to NI 33-109 and Appendix C thereto.
15. It would not be prejudicial to the public interest to grant the Exemption Sought.
16. Pursuant to section 14.11 of National Instrument 31-103 Registration Requirements Exemptions, and Ongoing Registrant Obligations, a notice has been sent to the clients of A&Q and its dealing representatives advising the clients of their rights to close the client's account.
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.