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BMO Private Investment Counsel Inc. and BMO Private Canadian Short-Term Bond Portfolio

2021-06-29 | Decision | 81-102 | Investment funds and structured products | https://www.osc.ca/en/securities-law/orders-rulings-decisions/bmo-private-investment-counsel-inc-and-bmo-private-canadian-short-term-bond-portfolio

National Instrument 81-102 Investment Funds, ss. 5.1(1)(f), 5.5(1)(b), 5.5(3), 5.6 and 19.1.


The Securities Commission has granted a merger approval and relief from the requirement to obtain investor approval for the merger of BMO Private Canadian Short-Term Bond Portfolio (Terminating Fund) into BMO Private Canadian Mid-Term Bond Portfolio (Continuing Fund). The decision is based on National Instrument 81-102 Investment Funds, specifically sections 5.1(1)(f), 5.5(1)(b), 5.5(3), 5.6, and 19.1.

Key facts include:

– The Filer, BMO Private Investment Counsel Inc., manages both funds and is a registered portfolio manager and exempt market dealer.
– The Funds are open-ended mutual funds and reporting issuers in Canada.
– The merger is proposed without unitholder approval as the units of the Terminating Fund are only available to clients under a discretionary investment management agreement with the Filer.
– The Filer is authorized to make investment decisions on behalf of the clients, including voting on securities matters.
– The merger does not meet all criteria for pre-approved reorganizations and transfers, particularly regarding the similarity of investment objectives and the lack of unitholder approval.
– The Independent Review Committee (IRC) has approved the merger, considering it fair and reasonable.
– The merger is expected to be neutral regarding fees and expenses and will be completed as a qualifying exchange under the Income Tax Act (Canada).
– The Filer will bear all costs associated with the merger, and no sales or redemption charges will apply.
– The merger is believed to be in the best interests of the unitholders due to factors such as stronger long-term performance of the Continuing Fund and increased portfolio diversification opportunities.

The outcome is that the merger is approved without the need for unitholder approval, and the Terminating Fund will be merged into the Continuing Fund and subsequently wound up.