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CWB Wealth Management Ltd.

2021-10-28 | Decision | 31-103 | Investment funds and structured products | https://www.osc.ca/en/securities-law/orders-rulings-decisions/cwb-wealth-management-ltd-0

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 13.5(2)(b)(ii)-(iii) and 15.1


The Securities Commission granted an exemption to CWB Wealth Management Ltd. from certain prohibitions in National Instrument 31-103, specifically subparagraphs 13.5(2)(b)(ii) and (iii). This exemption allows for in specie subscriptions and redemptions between managed accounts and investment funds, as well as between different investment funds.

Key points of the decision include:

1. The exemption applies to transactions involving managed accounts and both NI 81-102 funds (reporting issuers subject to National Instrument 81-102) and pooled funds (not reporting issuers, sold privately in Canada).

2. The exemption is subject to conditions ensuring that transactions are in the best interests of clients and consistent with the funds’ investment objectives.

3. Transactions must be approved by the independent review committee (IRC) for NI 81-102 funds, as per National Instrument 81-107.

4. Securities transferred must be valued fairly and in line with the funds’ valuation methods.

5. Clients must provide prior written consent for in specie transfers.

6. Records of in specie transfers must be maintained for five years.

7. No compensation is to be received by CWB Wealth Management Ltd. or its affiliates for these transactions, except for nominal administrative charges by the custodian and any dealer commissions.

8. For illiquid assets, an independent quote must be obtained before the transfer.

The decision ensures that the exemption is granted provided that these conditions are met, aiming to facilitate portfolio management while maintaining client interests and regulatory compliance.