The Securities Commission granted exemptive relief to Desjardins Global Asset Management Inc. and Desjardins Investments Inc. (the Filers) on behalf of Desjardins Quebec Balanced Fund (the Fund) from certain conflict of interest and self-dealing provisions to allow investment in a related limited partnership, Desjardins Capital SME L.P. (DCSME), which is not a reporting issuer. The relief is subject to conditions and is based on the following regulations:
– National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, specifically sections 13.5(2)(a) and 15.1.
– National Instrument 81-102 Investment Funds, specifically sections 4.1(2) and 19.1.
– Securities Act (Ontario), specifically subsections 111(2)(b) and (c), and 113 and 117.
The Fund, an open-ended investment fund trust, aims to provide income return and capital appreciation from a portfolio of Quebec securities. DCSME, a development capital fund, invests in small and medium-sized businesses in Quebec. The investment in DCSME is consistent with the Fund’s objectives and will be made at DCSME’s net asset value per unit.
The relief is conditional upon the Fund’s compliance with investment restrictions, including not holding more than 10% of DCSME’s voting or equity securities, not exercising control over DCSME, and adhering to illiquid asset restrictions. The Fund’s Independent Review Committee (IRC) must approve the investment, and the investment must be disclosed to investors.
The decision ensures that the investment does not result in duplicate fees, that the Fund does not vote DCSME’s securities or arranges for beneficial holders to vote, and that the investment is disclosed in the Fund’s reporting documents. The valuation of DCSME’s assets must comply with specific regulatory requirements, and an independent accountant must issue a report following each net asset value calculation.
The Commission concluded that the decision meets the test set out in the Legislation and granted the exemptions sought, provided the Filers adhere to the outlined conditions.