The Securities Commission granted an exemption to Silver Heights Capital Management Inc. from certain prohibitions in National Instrument 31-103, specifically subparagraphs 13.5(2)(b)(ii) and (iii), allowing in-specie transfers between managed accounts and pooled funds. This exemption is conditional upon several factors, including client consent for managed accounts, the suitability of portfolio assets for the receiving fund or managed account, and the maintenance of written records of transfers. Additionally, pricing conditions must be met, such as the value of transferred securities being at least equal to the issue price of fund securities for purchases, or equal to the net asset value per security for redemptions.
The exemption is based on the rationale that it will enable more efficient management of accounts, reduce transaction costs, and allow for the retention of institutional-size blocks of securities. The Filer will not receive compensation for in-specie transfers, and any costs incurred will be nominal administrative charges from the custodian or transaction fees from the dealer, if any.
The decision is supported by the Filer’s representations, including their registration status, intent to establish pooled funds, and the alignment of managed accounts with pooled funds’ investment objectives. The exemption is subject to the Filer’s adherence to specific policies and procedures, including obtaining prior written consent from clients, ensuring the consistency of portfolio securities with the investment criteria, and keeping detailed written records for five years.
The exemption is granted under the authority of section 15.1 of National Instrument 31-103, with the Ontario Securities Commission acting as the principal regulator. The exemption is also recognized in multiple jurisdictions under Multilateral Instrument 11-102 Passport System.