Assante Asset Management Ltd. has secured a regulatory exemption from the mutual fund self-dealing prohibitions allowing its funds to own Sun Life Financial Inc. stock. The exemption is necessary now that Assante is part of the Sun Life’s extended family.

Assante was purchased outright by CI Fund Management Inc. last year. CI is, in turn, 34% owned by Sun Life. As a result of the deal, Sun Life also became what’s considered a “substantial security holder” of Assante because it is deemed by the legislation to own approximately 34% of the outstanding shares of Assante, too.

The exemption is contingent on the requirement that a fund governance mechanism is used to oversee the holdings, purchases or sales of these securities for the mutual funds. The governance component is required to ensure that the funds’ trading decisions have been made free from any influence by Sun Life/


Ordinarily, the legislation prohibits a mutual fund from knowingly making an investment in a company that is a substantial security holder of the mutual fund, its management company or distribution company. However, regulators have been granting these exemptions if the fund managers set up independent review committees to ensure that the trades are made solely in unitholders’ interests.