The Securities Commission has granted Brownstone Asset Management Inc. (the Filer) an exemption from certain provisions of National Instrument 31-103, specifically subparagraphs 13.5(2)(b)(ii) and (iii), which generally restrict in specie transfers involving managed accounts and pooled funds. This exemption allows the Filer to conduct in specie subscriptions, where securities held in a managed account are used as consideration for fund securities, under specific conditions.
The Filer, an Alberta-based corporation, is registered as an adviser, investment fund manager, and exempt market dealer across various Canadian provinces. The Filer manages both existing and future pooled funds, which are not reporting issuers and sell securities privately in Canada. The Filer also offers discretionary portfolio management services to clients through managed accounts.
The exemption is contingent upon several conditions, including obtaining prior written consent from clients for in specie transfers, ensuring the securities transferred align with the fund’s investment objectives, and maintaining equal value between the transferred securities and the fund securities issued. Additionally, the transferred securities must not be considered illiquid assets, and the Filer must keep detailed records of all in specie transfers for five years. The Filer or its affiliates cannot receive compensation from the sale of fund securities, except for nominal administrative and commission charges.
This decision is based on the Filer’s representations and is subject to the test set out in the applicable securities legislation. The Alberta Securities Commission is the principal regulator, and the decision also applies to British Columbia, Nova Scotia, and Ontario through the Passport System.