NP 11-203– bulk transfer – amalgamation – amalgamation, a number of business locations and registrants, no third party, registrants are registered in multiple jurisdictions, amalgamation is not contrary to the public interest, no negative consequences, on the ability of the applicant to comply with all applicable regulatory requirements or satisfy their obligations to their client – NI 33-109 and CP 33-109.
Applicable Legislative Provisions
National Instrument 33-109 Registration Information, ss. 2.2, 2.3, 4.2, 7.1.
Form 33-109F3 Business Locations Other Than Head Office.
Companion Policy 33-109 Registration Information, s. 3.4.
Citation: 2018 BCSECCOM 200
June 27, 2018
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
CREDENTIAL SECURITIES INC.
QTRADE SECURITIES INC.
(QSI) (Collectively the "Filers")
1 The securities regulatory authority or regulator in each of British Columbia and Ontario has received an application from the Filers for a decision under the securities legislation of those jurisdictions (the Legislation) for relief from the requirements contained in sections 2.2, 2.3, 3.2 and 4.2 of National Instrument 33-109 Registration Information (NI 33-109) pursuant to section 7.1 of NI 33-109 to allow the bulk transfer (the Bulk Transfer) of the securities registration of all of the registered and permitted individuals of CSI and QSI (collectively, the Registrants) and all of the branches of CSI and QSI (collectively, the Locations) to Credential Qtrade Securities Inc., the entity resulting from the amalgamation of CSI and QSI, expected to occur on or about July 1, 2018 (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the British Columbia Securities Commission is the principal regulator for this application;
(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada, except for Québec (together with British Columbia and Ontario, the Jurisdictions); and
(c) the decision with respect of the Exemption Sought is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario (the principal regulator and the regulator in Ontario being the "Decision Makers").
The Filers have made a separate application to the Autorité des marchés financiers for relief from section 11.1 of the Derivatives Regulation (Québec) pursuant to section 86 of the Derivatives Act (Québec) to allow the Bulk Transfer of CSI and QSI individuals registered under Québec derivatives legislation and all of the Locations from CSI and QSI to Credential Qtrade Securities Inc,
2 Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
3 This decision is based on the following facts represented by the Filers:
Credential Securities Inc. – Amalgamating Corporation
1 CSI is a corporation incorporated under the Canada Business Corporations Act (CBCA). Its head office is located at 1111 West Georgia Street, Suite 800, Vancouver, British Columbia, V6E 4T6.
2 CSI is registered under applicable Canadian securities laws as an investment dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Québec, Saskatchewan and Yukon and as a derivatives dealer in Québec. CSI is also a dealer member of Investment Industry Regulatory Organization of Canada (IIROC). CSI's National Registration Database (NRD) number is 6190.
3 CSI is an affiliate and a wholly-owned subsidiary of Aviso Wealth Inc. (Aviso).
4 CSI has 331 registered and permitted individuals (collectively, the CSI Registrants).
5 CSI is not in default of any securities legislation in any of the Jurisdictions. Qtrade Securities Inc. – Amalgamating Corporation
6 QSI is a corporation incorporated under the CBCA. Its head office is located at One Bentall Centre, Suite 1920, 505 Burrard Street, Vancouver, British Columbia, V7X 1M6.
7 QSI is registered under applicable Canadian securities laws as an investment dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia. Nunavut, Ontario, Prince Edward Island, Québec, Saskatchewan and Yukon and as a derivatives dealer in Québec. In addition, QSI is a dealer member of the Investment Industry Regulatory Organization of Canada IIROC. QSI's NRD number is 9860.
8 QSI is an affiliate and a wholly-owned subsidiary of Aviso.
9 QSI has 139 registered and permitted individuals (collectively, the QSI Registrants).
10 QSI is not in default of any securities legislation in any of the Jurisdictions.
The Proposed Amalgamation
11 As contemplated when Qtrade Canada Inc. (the former parent company of QSI), Credential Financial Inc. (the former parent company of CSI) and Northwest & Ethical Investments L.P. combined their businesses to form Aviso, CSI and QSI now wish to amalgamate (the Amalgamation).
12 The amalgamation of CSI and QSI will be a horizontal short-form amalgamation pursuant to section 184(2) of the CBCA.
13 The name of the amalgamated entity (the Amalgamated Corporation) will be Credential Qtrade Securities Inc. (with a French version Valeurs mobilières Credential Qtrade Inc.). The change of name of the Filers to Credential Qtrade Securities Inc. (with a French version Valeurs mobilières Credential Qtrade Inc.) will be effective on the Amalgamation Date.
14 The sole shareholder of the Amalgamated Corporation will be the same as the current sole shareholder of each entity (i.e. Aviso). Aviso will own all of the issued and outstanding common shares of the Amalgamated Corporation. As such the indirect control over both CSI and QSI will not change and will remain shared by Desjardins Financial Holding Inc. and CU CUMIS Wealth Holdings LP. CU CUMIS Wealth Holdings LP is a holding entity owned by The CUMIS Group Limited and Central 1 Credit Union, Credit Union Central Alberta Limited, Credit Union Central of Saskatchewan, Credit Union Central of Manitoba Limited and Atlantic Central.
15 The head office of the Amalgamated Corporation will be located at CSI’s current head office which is 1111 West Georgia Street, Suite 800, Vancouver, British Columbia, V6E 4T6. Its NRD number will be the same as CSI’s NRD number, which is 6190.
16 The Amalgamation is scheduled to occur on or about July 1, 2018 (the Amalgamation Date). The Amalgamation will not proceed without the prior non-objection or approval of IIROC, which shall be sought by means of a separate application.
Submissions by the Filers in support of the Exemption Sought
17 Subject to obtaining the Exemption Sought, no disruption in the services to be provided by the Amalgamated Corporation to clients is anticipated as a result of the Amalgamation.
18 The Exemption Sought will not have any negative consequences on the ability of CSI, QSI or the Amalgamated Corporation to comply with any applicable regulatory requirements or the ability to satisfy any obligations in respect of their respective clients.
19 Given the number of CSI Registrants and QSI Registrants (470 registrants in total) and the Locations to be transferred over from CSI and QSI to the Amalgamated Corporation on the Amalgamation Date, it would be unduly time consuming and difficult to transfer each of the CSI Registrants and QSI Registrants and Locations through the NRD in accordance with the requirements of NI 33-109, if the Exemption Sought is not granted.
20 Both Filers are registered in the same categories of registration in the same Jurisdictions, affording the opportunity to seamlessly transfer the CSI Registrants and QSI Registrants and Locations to the Amalgamated Corporation on the Amalgamation Date by way of Bulk Transfer and thereby ensuring that there is no interruption in registration.
21 At the time of the Bulk Transfer, all of the CSI Registrants and QSI Registrants will be the only registrants of the Amalgamated Corporation and the Locations will be the only branches of the Amalgamated Corporation. Accordingly, the transfer of registrations of the CSI Registrants and QSI Registrants and the Locations on the Amalgamation Date by means of Bulk Transfer can be implemented in a relatively simple manner without any significant disruption to the registrable activities of the CSI Registrants and QSI Registrants, the Locations, CSI, QSI or the Amalgamated Corporation, and will be easier to administer than having to transfer the registration of each of the CSI Registrants and QSI Registrants and Locations on an individual basis.
22 Allowing the Bulk Transfer of the CSI Registrants and QSI Registrants to occur on the Amalgamation Date will benefit (and have no detrimental impact on) the clients of the Filers by facilitating seamless service on the part of the CSI Registrants and QSI Registrants.
23 The Exemption Sought complies with the guidelines 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.
24 It would not be prejudicial to the public interest to grant the Exemption Sought.
25 The Amalgamated Corporation will assume the activities, risk management functions, obligations and liabilities of the Filers on the Amalgamation Date.
26 There are no third parties involved in the amalgamation of CSI and QSI to become the Amalgamated Corporation, other than external advisors that are assisting in the transaction.
27 The Filers have made all of the required payments to CGI Information Systems and Management Consultants Inc. and an NRD administrator has begun reviewing the transfer process, subject to approval of the Exemption Sought, in order to ensure a seamless Bulk Transfer.
28 Clients of the Filers will be receiving formal notice of the Amalgamation with their June 30, 2018 quarterly statements, which will be sent in mid-July.
4 Each of the Decision Makers is satisfied that the following decision meets the test set out in the Legislation for the Decision Makers to make the following decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that the Filers make acceptable arrangements with CGI Information Systems and Management Consultants Inc. in respect of the Bulk Transfer and that the Filers make these arrangements in advance of the Bulk Transfer.
Acting Director, Capital Markets Regulation British Columbia Securities Commission