The Ontario Securities Commission (OSC) granted an exemption to Allianz Investment Management U.S. LLC from the adviser registration requirements under subsection 25(3) of the Ontario Securities Act. The exemption allows the company to provide investment advice and portfolio management services to its Canadian affiliate in Ontario without registration, under certain conditions.
The key points of the decision are:
1. Allianz Investment Management U.S. LLC is part of the Allianz Group and is affiliated with a Canadian insurance company regulated by the Office of the Superintendent of Financial Institutions. The company does not have an office or employees in Canada and provides services exclusively to Allianz Group entities.
2. The company is not required to register as an adviser in the U.S. since it only advises Allianz Group entities and does not provide services to external clients.
3. The international adviser registration exemption does not apply to the company’s advice on Canadian portfolio assets of the Canadian affiliate because the advice is not incidental to advice on foreign securities.
4. The Canadian affiliate does not employ individuals to provide investment advice on its Canadian portfolio assets and intends to outsource this function to Allianz Investment Management U.S. LLC.
5. The Canadian portfolio assets managed by the company are owned by the Canadian affiliate, with no external stakeholders in Ontario or elsewhere directly affected by the investment advice.
6. Subsection 74(1) of the Securities Act allows the OSC to exempt a person or company from section 25 if it is not prejudicial to the public interest.
The OSC ruled that the exemption is granted with the conditions that the company provides advice and services only to its affiliates that are authorized to operate as insurance companies in Canada or are holding companies with the principal activity of holding securities of such affiliates. The exemption will remain valid as long as the affiliates remain affiliated with the company and are considered “permitted clients” as defined in National Instrument 31-103.
The decision was made in the public interest and was issued on December 22, 2020, by Commissioners Lawrence Haber and Craig Hayman of the Ontario Securities Commission.