AIM Funds Management Inc. has secured an exemption from self-dealing provisions by establishing an independent review committee.

The exemption, granted by the Ontario Securities Commission, is designed to permit some of its mutual funds to invest in: insurance companies when the funds are involved with the insurance companies as underlying funds of various insurance products; and, banks when the mutual funds are involved in counterparty arrangements with the banks regarding RSP Clone fund.

The decision notes that there are various insurance company sponsored products that AIM and the funds are involved in, among them: individual variable insurance contracts, defined contribution pension plans, and Universal Life.

Without this decision, AIM funds could not invest in insurance companies that become a substantial securityholder in a fund as a result of developing one of these products.

For example, AIM American Premier Class is currently prohibited from investing in Manulife Financial, solely because Manulife holds more than 20% of the voting securities of the fund. As well, Trimark Canadian Fund is prohibited from investing in Sun Life Financial Inc. and CI Funds Inc.

As for the banks, they may become substantial securityholders in a fund for hedging purposes, which would then restrict the fund from investing in the bank. For example, Bank of Montreal through its subsidiary BMO Nesbitt Burns Inc. is deemed to beneficially own in excess of 20% of the shares outstanding in AIM Global Telecommunications Class and in excess of 20% of AIM Global Theme Class arising from hedging its position under RSP Clone Fund arrangements.

AIM was granted exemption from the current rules, with the understanding that it will create an independent review committee to oversee trading of its funds in these securities to ensure that they act in the best interests of unitholders.