The Securities Commission granted an exemption to non-reporting issuer mutual funds (Top Funds) managed by TD Asset Management Inc. (TDAM) from certain self-dealing provisions under the Securities Act (Ontario) and National Instrument 31-103. This exemption allows the Top Funds to invest in securities of related underlying investment entities (Underlying Funds) without breaching self-dealing restrictions that prevent substantial security holders or responsible persons from transacting with the funds they manage.
The exemption is subject to conditions, including that the Top Funds and Underlying Funds only distribute securities to accredited investors, the investments align with the Top Funds’ objectives, and no duplicate management or sales fees are charged. Additionally, the Top Funds must not vote the securities of the Underlying Funds they hold, except to pass votes to beneficial holders, and must maintain a certain level of unaffiliated ownership in the Underlying Funds.
The decision also revokes and replaces similar prior relief granted to TDAM, eliminating redundancy. The relief is based on representations by TDAM regarding the structure, management, and operations of the Top Funds and Underlying Funds, including their valuation, liquidity, and distribution practices.
The decision is underpinned by sections 111(2)(b) and (c), 111(4), 113, and 144 of the Securities Act (Ontario), and sections 13.5(2)(a) and 15.1 of National Instrument 31-103, which regulate self-dealing and conflict of interest in securities transactions. The outcome facilitates efficient and cost-effective investment strategies for the Top Funds while ensuring investor protection through specific conditions and transparency requirements.