The Manager’s Statement of Policies Concerning Conflict of Interest with Related Issuers and Connected Issuers as of July 1, 2014.
Conflicts of Interest Disclosure Statement
Related Issuers
Connected Issuers
Other Related or Connected Issuers
Other Relationships
Referral Arrangements
The Manager is providing this Conflicts Disclosure Statement concerning Conflicts of Interest with Related and Connected Issuers and Related Registrants (“Disclosure Statement of Policies”) to you, our clients, to disclose to you the Manager’s relationships in respect of securities of related or connected issuers, certain other issuers and related registrants, where conflicts of interest may arise.
Under certain circumstances the Manager may deal with or for you in securities where the issuer of the securities or another party to the transaction is this firm or a party having an ownership or business relationship with us. Since these transactions may create a conflict or the appearance of a conflict between our interests and yours, the Manager has adopted policies and procedures to assist in identifying and minimizing any conflicts of interest that may arise.
In this Conflicts Disclosure Statement, the Manager describes securities transactions it may enter into that may involve issuers that are related or connected to the Manager or related registrants; the Manager’s relationships with these entities where conflicts of interest could arise; and the use of the terms “influential securityholder” , “related issuer” and “connected issuer” to describe these relationships as explained below.
Influential Securityholder – An influential securityholder exercises influence over an issuer on the basis of direct or indirect ownership of securities aggregating more than 20% of the voting rights or entitlements to distributions of an issuer (or more than 10% if accompanied by the entitlement to nominate at least 20% of a board of directors). Related Issuer – A person or company is a related issuer to the firm if they are an influential securityholder of the firm; we are an influential securityholder of theirs; or each of us is a related issuer of the same third person or company.
Connected Issuer – An issuer or selling securityholder is a connected issuer of the firm if they are distributing securities and one of them, or a related issuer of one of them, has a relationship with the firm; a related issuer to the firm; a director, officer or partner employed by the firm; or a director, officer or partner of a related issuer to the firm that may lead a reasonable prospective purchaser of the securities to question if we are independent of the issuer or selling securityholder for the distribution.
The Manager is required to make certain disclosures where it advises you, or exercise discretion on your behalf with respect to securities issued or traded by us that are securities of a related issuer or, in the course of a distribution, a connected issuer. Please note, however, that this Disclosure Statement of Policies does not list our relationships with related or connected issuers that are funds containing the name “Scotia,” which readily identifies them as affiliates of the Manager.
The Manager has a relationship with the issuers listed in this Disclosure Statement of Policies. The Manager, its directors, officers, partners, advisers and/or other employees may from time to time trade on a discretionary basis on your behalf in a security issued by these listed issuers. If you wish further information concerning the relationship between the firm and these listed issuers, please contact us. This Disclosure Statement of Policies is updated annually and is also provided at the following times and in the following manner:
The Manager is prepared to act as an adviser in the ordinary course of its business in accordance with its usual practices and procedures and in accordance with all applicable disclosure and other regulatory requirements.
The following is a list of entities that are related issuers of the Manager or who, by reason of its relationship with The Bank of Nova Scotia (also referred to as “Scotiabank”) or one of its subsidiaries, may be deemed to be related to The Manager.
The Bank of Nova Scotia (“Scotiabank”) wholly owns, directly and indirectly, the general partner of the Manager. Based on information provided to the Manager by Scotiabank, the following parties or issuers, by reason of their relationship with Scotiabank, may also be considered to be related to the Manager.
Banco del Caribe (Venezuela)
Crediscotia Financiera S.A. (formerly Banco del Trabajo, S.A.)
Profuturo AFP S.A.
Scotia Investments Jamaica Limited
Scotia Group Jamaica Limited
Scotiabank Capital Trust
Scotiabank Inverlat, S.A.
Scotiabank, Peru S.A.A
Scotiabank Chile (formerly Scotiabank Sud Americano, S.A. (Chile))
Scotiabank Tier 1 Trust
Scotiabank Trinidad and Tobago Limited
The following is a list of entities and fund families that are, or may be deemed to be, connected issuers of the Manager.
Funds managed by 1832 Asset Management L.P.
In addition to the ScotiaFunds, the Scotia Private Pools, the Pinnacle Portfolios and the Integra Funds, the following funds or fund families are managed by 1832 Asset Management L.P., an indirect wholly-owned subsidiary of The Bank of Nova Scotia:
Funds managed by Aurion Capital Management Inc. This fund family is managed by Aurion Capital Management Inc., an indirect wholly-owned subsidiary of The Bank of Nova Scotia.
Funds managed by Tangerine Investment Management Inc. This fund family is comprised of mutual fund trusts managed by Tangerine Investment Management Inc., a wholly-owned subsidiary of The Bank of Nova Scotia.
In addition, in certain circumstances issuers with whom Scotiabank, Scotia Capital Inc. or their related issuers has a business relationship (such as being borrowers from Scotiabank or issuers in which Scotiabank has a significant investment) may be considered connected issuers of Scotiabank. In certain provinces, the issuers listed as connected issuers may be considered to be related issuers of Scotia Capital Inc. because Scotia Capital Inc. has the power to exercise a controlling influence over the issuer’s management or policy.
The following is a list of entities that are, or may be deemed to be, related issuers or connected issuers of the Manager. Scotia Managed Companies Administration Inc. acts as administrator of these entities for a fee and certain directors or officers of the entities may be employees of related parties to the Manager.
Related Registrants
The following is a list of registrants under the Securities Act (Ontario) which are wholly owned, directly or indirectly, by The Bank of Nova Scotia:
Special Purpose Entities
The following is a list of special purpose entities which are managed by Scotia Capital Inc. or The Bank of Nova Scotia:
Commission Finance Vehicles
The following entities are financing vehicles used for arranging and paying the selling commissions related to the distribution of units sold on a redemption charge basis managed by 1832 Asset Management L.P.
TMX Group Limited
Scotia Capital Inc. owns or controls less than a 10% equity interest in the TMX Group Limited (“TMX”) and has a nominee director serving on its Board of Directors. As such, Scotia Capital Inc. may be considered to have an economic interest in TMX which creates the potential for conflicts of interest between Scotia Capital Inc. and TMX and the marketplaces or entities owned and operated by it, including the Toronto Stock Exchange, the TSX Venture Exchange, the Alpha Exchange and related Alpha entities (referred to as “Alpha”), Clearing and Depository Services Inc., Canadian Derivatives Clearing Corporation, Montreal Exchange Inc. and the services and products each provides. In order to address potential conflicts of interest, Scotia Capital Inc. is required to meet certain terms and conditions pursuant to recognition orders issued by the Ontario Securities Commission on July 4, 2012 and by the Autorité des marchés financiers on May 2, 2012.
Other Conflicts of Interest
Although the Manager is under common ownership with the other registrants and may from time to time have directors and officers in common with the other registrants, the Manager is a separate and distinct corporate entity.
The Manager generally carries on its advising activities independent of the other registrants owned by Scotiabank. However, from time to time there may be certain cooperative business arrangements between it and the other registrants, such as arrangements relating to introduction of clients, distribution of products, advisory relationships or administrative support.
In addition to applicable regulatory provisions and contractual provisions respecting any business arrangements that may exist between the Manager and the other registrants, the directors, officers and employees of each of the registrants are subject to Guidelines or Codes of Conduct governing their actions. These Guidelines are supplemented by our internal compliance policies and procedures.
Allocation of Investment Opportunities
The Manager has adopted the following policy to ensure fairness in the allocation of investment opportunities among clients:
Disclosure of Brokerage Commission
In the course of managing the Client’s investment portfolio, brokerage commissions may be generated through security purchases and sales. The Manager may direct these commissions to pay for order execution as well as services used in the investment decision-making process that will be of benefit to all clients’ investment portfolios. Upon written request, the Manager will provide the Client with the names of the persons or companies who received payment through brokerage commissions, and the nature of the services purchased.
General
Referral arrangements may exist from time to time within Scotiabank Group. Referral arrangements are arrangements in which an existing or prospective client is referred to or from a registrant within Scotiabank Group, and compensation is provided to or by a registrant in respect of the referral service provided. Referrals may be made for a variety of reasons, including to provide specific products or services suited to your financial planning needs, geographic location, or as part of a transition to another relationship manager or firm.
The amount and calculation of compensation that may be paid for a referral varies. Fees may be calculated by reference to the number or size of referrals, the business resulting, or some combination. A calculation may involve a fixed or variable amount based on revenue or assets, and may be a one-time payment or ongoing. It may also depend on certain conditions, such as a relationship being established.
Securities regulations require you be referred to a party with the appropriate qualifications and registrations to provide the services. Other regulations may require individual employees and members within Scotiabank Group to be authorized to deal in specific products or services provided to a referred client. In limited circumstances, referral arrangements may be entered into by members of Scotiabank Group with persons or organizations outside of Scotiabank Group.
Specific
You may have been referred to the Manager by another member of Scotiabank Group. Or you may have been referred by the Manager to another member of Scotiabank Group that is qualified and registered to offer you products or services not offered by the Manager. The purpose of these referrals is to introduce you to experts within Scotiabank Group who are best suited to help you achieve your financial goals. Referral fees may be payable to those providing the referral service, but the amount of any referral fee paid or received for referral services will not affect the fees paid or payable by you. A brief description of the members of the Scotiabank Group to whom you may be referred, and the general nature of the services each provides, is set out below.
Fees for Referral Services
A referral fee may be paid or received, directly or indirectly, by a registrant member of Scotiabank Group or by a referring employee of the firm. As indicated earlier, the amount of any referral fee paid or received for referral services will not affect the fees paid or payable by you. Particulars of the referral arrangements involving the Manager and fees paid or received in respect of its referral arrangements, are provided below. If you would like more information on these referral arrangements, do not hesitate to ask the Manager’s representative helping you today. Our goal is to ensure that you have an outstanding experience working with us and that our services are tailored to your needs.
Current Referral Arrangements Involving the Manager
The Manager may pay a one-time fee to Roynat for a referral of new business that results in a new client for the Manager, equal to a percentage of the estimated first year’s management expense ratio from the new business. Eligible Roynat personnel who refer the new business may receive up to one-half of the payment to Roynat, subject to certain performance conditions and a maximum amount payable per referral.
Other Matters of Interest
Policies and procedures have been adopted by Scotiabank Group to assist in identifying and addressing any conflicts of interest that may arise from these referral arrangements.
A referral fee may also be paid if a referral arrangement is entered into between the Manager and a person or entity outside of Scotiabank Group. As with referral arrangements between the Manager and another member of Scotiabank Group, details of these referral arrangements, including the manner in which the referral fee for referral services is calculated and the party to whom it is paid, will be provided to referred clients. All services resulting from a referral arrangement relating to your account which require registration under applicable securities laws will be provided by the registrant receiving the referral.