Information about WhiteHaven

WhiteHaven Securities Inc. (WHS) is an Exempt Market Dealer operating in the Province of Alberta, British Columbia, Ontario and Quebec and a Mutual Fund Dealer in the Province of Quebec.

WhiteHaven Asset Management Inc. (WHAM) is a Portfolio Manager in the Province of Alberta, British Columbia, Ontario and Quebec and is a Derivatives Portfolio Manager in the province of Quebec.

In this document we will refer to WHS and to WHAM as “WhiteHaven”.

WhiteHaven is a member of the Investment Funds Institute of Canada (IFIC) with the Autorité des marchés financiers (AMF) in Quebec as its primary regulator. WhiteHaven endorses and adheres to the IFIC Code of Ethics and the IFIC Privacy Code. We meet or exceed the provincial securities regulator’s requirements for bonding insurance, protecting those investments administered by our firm. In addition each representative maintains an individual Errors and Omissions liability insurance coverage.

Conflict of Interest Disclosure

WhiteHaven wishes to inform its clients of how it identifies and responds to conflicts of interest in order to control their impact. We consider there to be a conflict of interest where the interests of different parties, such as interests of a client and those of WhiteHaven are inconsistent or divergent. We strive to identify all existing material conflicts of interest, and material conflicts of interest that we, in our reasonable opinion, would expect to arise. We then assess the level of risk associated with each conflict. We avoid any situation that would entail a serious conflict of interest or represent too high a risk for clients or the integrity of the markets. In any other situation entailing a conflict of interest, we ensure that appropriate measures are implemented to control the conflict of interest effectively.

The following are some of the general conflicts of interest that may affect the service we provide to you. We attach as Schedule B to the document, the most recent list of all conflicts of interests which provides more details as to the specific conflicts of interests that may affect you. Schedule B will be updated from time to time and an updated version will be posted on our website at www.whitehaven.ca/COID.

Disclosure in respect of securities of Related Issuers and Connected Issuers

WhiteHaven may deal in the securities of entities or people that are associated, related or connected to it.

When WHAM wishes to cause a portfolio managed by it to purchase a security of an issuer in which a Responsible Person (as such expression is defined in Schedule A hereto) or an associate of a Responsible Person is a partner, officer or director of this issuer (an “Associated Issuer”), National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations requires that (i) such fact be disclosed to the clients and (ii) before the purchase, a written consent of the client to the purchase be obtained.

WhiteHaven established the following policies aimed at avoiding any conflicts of interest that may arise as a result of WhiteHaven’s relationship with Related Issuers and Connected Issuers (as such expressions are defined in Schedule A hereto) and ensuring that all investment decisions and their execution are made in the best interest of WhiteHaven’s clients:

All investment decisions or trades relating to purchases and sales of client portfolio securities will be made in the ordinary course of business. WhiteHaven will maintain operational and decision-making autonomy in the management of clients’ funds and the selection of portfolio investments on the basis of the business judgment of responsible representative uninfluenced by considerations other than the best interest of the clients.

WhiteHaven may, from time to time, use its discretion to purchase or sell securities of any Related Issuer and/or Connected Issuer. However, WhiteHaven will only do so if:

  • it considers a purchase or sale to be in the best interests of its client;
  • any purchase will not give rise to any duplication of management fees for WhiteHaven, or an affiliate thereof; and
  • the prior client consent has been obtained.

Supervision

Some members of WhiteHaven’s management team, directors or shareholders, including the ultimate designated person and chief compliance officer may act as representatives of WhiteHaven, while having compliance functions. WhiteHaven has taken measures to ensure that the supervision of these representatives remains as effective as possible notwithstanding their other functions for WhiteHaven. A list of the management functions which are held by people who also act as representative is included in Schedule B to this document.

Should Compliance identify, or be made aware of, any issue involving a representative who is also a member of management, such person shall report his findings straight to the board of directors of WHS or WHAM, as the case may be.

Fair Allocation amongst Clients

WHS is engaged to act as an exempt market dealer and/or mutual fund dealer by various clients. At times, WhiteHaven may make the same investment for one or more of its clients or amongst its clients. Similarly, WHAM acts as portfolio manager for various accounts. As access to some of these investment may be limited or offered at different prices, conflicts between the treatment of different clients may occur.

In order to ensure fairness in the allocation of investment opportunities it offers to its clients, WhiteHaven will allocate investment opportunities with consideration to the prime determinants of market exposure, cash availability and industry sector exposure and with regard to the suitability of such investments to each client. Investment decisions and trades shall be made on the basis of the judgment of a responsible representative uninfluenced by considerations other than in the best interest of its clients.

Fees

WHS typically receives its fees from the manufacturer of the investment product it distributes. Such fees, which can take the form of up front commissions, deferred commissions and/or trail fees are described in the offering documents relating to each such investment product.

WHS receives a reimbursement of expenses from issuers to cover the costs of due diligence relating to WHS’s onboarding process. Issuers cover these due diligence expenses whether they are onboarded by WHS or rejected.

Should the mutual funds be held in a RRSP, RRIF or other tax deferral plans, the trustee of the plan may annually deduct a trustee fee from the funds. The trustee may also charge a deregistration fee and transfer out fee.

Personal Interests and Outside Business Activities

In the ordinary course of performing their duties, our directors, officers, employees, representatives and agents may find their personal interests are in potential conflict with those of a client. For example, our management team may, from time to time, personally wish to invest in certain investment products of issuers in which WhiteHaven is invested, may act as director or officer of such issuers or have business relationships with the issuers in which WhiteHaven invests or with advisors or service providers of such issuers.

We have developed a policy governing employees which state that our personnel must never put their own interests ahead of their responsibilities toward clients or WhiteHaven. It also reinforces the fact that any material conflict of interest must be addressed in a manner that is fair, equitable, transparent and consistent with the clients’ best interests.

When personnel engage in certain activities, interests or associations outside WhiteHaven, a conflict of interest may arise between the person’s personal interests and those of WhiteHaven and its clients. WhiteHaven has developed a policy that governs personnel’s outside business activities and to which all personnel must adhere. In few circumstances, an employee of WhiteHaven may serve on the board of directors or other governing body of a publicly traded company. Further, WhiteHaven has implemented a notification and pre-approval process to restrict any outside business activity that would interfere or give the appearance of interfering with an employee’s ability to act in the best interests of, or perform work for, WhiteHaven and its clients.

Employees are reminded quarterly regarding the importance of the reporting of outside business activities and are encouraged to communicate with Compliance if they have any questions regarding what constitutes a reportable outside business activity.

A list of the most important conflicts arising out of Personal Interests and Outside Business Activities is attached hereto as Schedule B.

Personal Trading

All WhiteHaven employees are required to put the interests of clients ahead of their own personal interests and must comply with the personal trading policy in effect. WhiteHaven believes that in order to avoid any potential for conflict of interest, its employees and other covered persons must not invest in any securities other than mutual funds, pooled funds, market indices and their derivatives (e.g. iShares, listed futures) of any equity asset class managed by WhiteHaven. Furthermore, if mutual funds or pooled funds managed by WhiteHaven are purchased, a one-month holding period applies. From time to time, some Representatives and employees of WhiteHaven may invest in exempt market products distributed by WhiteHaven, but WhiteHaven employees and Representatives are required to report all personal transactions to Compliance for pre-approval.

Privileged Information

The use of privileged information (also referred to as material non-public information) and the disclosure of such information to any person not entitled to receive it are prohibited. Moreover, no personnel of WhiteHaven may trade, either personally or on behalf of others (such as investment funds and private accounts managed by WhiteHaven), while in the possession of material, non-public information.

Gifts and Entertainment

Giving, receiving or soliciting gifts in a business setting may create an appearance of impropriety or may raise a potential conflict of interest for WhiteHaven. The overriding principle is that all WhiteHaven employees should not accept inappropriate gifts, favours, entertainment, special accommodations, or other things of material value that could influence their decision-making or make them feel beholden to an individual or firm.

WhiteHaven has adopted and implemented firm policies in order to prohibit any person acting on its behalf from paying or accepting any fee or commission, or providing or receiving any non-monetary benefit that is likely to conflict to a material extent with any duty that WhiteHaven owes to its clients or any duty which the recipient firm owes to its clients.

Referral Arrangements

WhiteHaven has referral arrangements with certain parties, pursuant to which that party may market, promote and introduce certain clients to WhiteHaven. Under these referral arrangements, the other party generally receives a referral fee from WhiteHaven for its referral services. Under Canadian regulations, WhiteHaven is required to disclose the nature of such referral arrangements, including the fees WhiteHaven pays such parties. Such disclosure is included in the document attached hereto as Schedule B.

Compliance is notified of the referral arrangements involving a shared commission. Prior to accepting to act in furtherance thereof, Compliance reviews the file to ensure that all conflict of interests are controlled. Compliance also ensures that Representatives are performing their duties adequately and that all regulatory requirements are met and that all internal policies are respected.

Proxy Voting

A Proxy Voting Policy was put in place for Clients of WHAM, who may always request to receive proxy-related materials if they wish to and may also request to obtain information on the manner in which their shares were voted in their favor.

Trading Error

WhiteHaven has the responsibility to effect orders correctly, promptly and in the best interests of its clients. Should any error occur in the handling of any client transactions due to WhiteHaven’s actions, inaction, or actions of others, WhiteHaven’s policy is to seek to identify and correct any errors as promptly as possible without disadvantaging the client or benefiting WhiteHaven in any way

Other conflicts of interest

Other potential or actual conflicts of interest may arise. We will continue to take the necessary steps to identify and respond to such situations fairly and reasonably, and update our policies as required. Where not avoided, any material conflicts of interest will be disclosed to you as they arise.

 

SCHEDULE B
CONFLICT OF INTEREST DISCLOSURE
UPDATED AS OF JANUARY 2019

 

Associated Issuers, Related Issuers and Connected Issuers Relationships; Personal Interests and Outside Business Activities

Solstar Capital Inc.

In connection with the trade in debentures of Solstar Capital Inc. WHS has identified the following conflicts of interest:

  1. Solstar Capital Inc. was formed notably to make loan advances to Solstar Pharma Inc. (the “Operating Entity”) from the net proceeds of the offering in order to finance its business. Solstar Capital Inc. and the Operating Entity are related issuers.
  2. Athanasios Baltzis, the president, ultimate designated person (UDP) and controlling shareholder of WHS, is the brother of Dionissios Baltzis, the president, director and principal shareholder of Solstar Capital Inc. and officer, director and principal shareholder of the Operating Entity.
  3. WhiteHaven owns 5% of the issued and outstanding shares of the Operating Entity, which were issued to WHS by the Operating Entity in consideration of consulting services rendered by WhiteHaven to the Operating Entity.
  4. Solstar Capital Inc. may be considered a “connected issuer” of WhiteHaven pursuant to applicable Canadian securities laws.

Fashion Hero

Athanasios Baltzis, the president, ultimate designated person (UDP) and controlling shareholder of WHS sits on the board of Les Productions Beauty World Search inc., which is an affiliate of Les Productions TV BWS Inc. WHS distributes first ranking bonds to finance certain activities of Les Productions TV BWS Inc. in connection with the Fashion Hero television show financing for which WHS receives a compensation.

MVMT Capital Fund

  1. It is anticipated that WhiteHaven Securities (“WhiteHaven”) will act as a selling agent in connection with the issuance of units of MVMT Capital Fund (the “Fund”)
  2. WhiteHaven is controlled by WhiteHaven Holdings Inc. (“WhiteHaven Holdings”).
  3. WhiteHaven Holding owns 50% of issued and outstanding shares of the manager of the Fund, WhiteHaven Capital Inc. (the “Manager”).
  4. The Manager is the controlling shareholder of the general partner of the Fund, MVMT Capital GP (the “GP”).
  5. The Fund does not carry on any business directly and will depend on the GP and the Manager to perform the obligations under the material agreements in respect of the loans and of the assets of the Fund.
  6. WhiteHaven will be paid a brokerage fee of up to 10% of the gross proceeds realized on the sale of the units while acting as selling agent under the offering. WhiteHaven Holdings will also receive economic benefits derived from its ownership of Manager, should the Fund perform in excess of its target 10% return.
  7. Subscribers should note that if they purchase units of the Fund through WhiteHaven, they will not be purchasing securities from a dealer that is independent of the Fund. For the reasons described above, the Fund could be considered a “connected issuer” of WhiteHaven under applicable Canadian securities laws.

All-Star Inc. and Location d’autos All-Star Inc.

In connection with the trade in shares in the share capital of All-Star Inc., WHS has identified the following conflicts of interest:

  1. All-Star Inc. (a holding company) was formed to make loan advances to Location d’autos All-Star Inc. (an operating company) from the net proceeds of the offering in order to finance its business. All-Star Inc. and Location d’autos All-Star Inc. have the same president and sole director.
  2. Youri Bourdon, the vice-president and a shareholder of WHS, who also acts as dealing representative for WHS, is a control person of Location d’autos All-Star Inc..
  3. WHS does not hold any share in the share capital of All-Star Inc. or Location d’autos All-Star Inc., but WHS receives selling commissions from All-Star Inc. for trades in the shares of All-Star Inc.
  4. Youri Bourdon receives a remuneration from WHS for its implication in any trade involving the shares of All-Star Inc.
  5. Alexandre Galasso, who is a close business associate of Youri Bourdon and representative of WHS receives a remuneration from WHS for its implication in any trade involving the shares of All-Star Inc.
  6. All-Star Inc. may be considered a “related issuer” of WhiteHaven pursuant to applicable Canadian securities laws.

Supervision

As is often the case with other smaller firms, individuals perform many roles within WhiteHaven which may include supervisory roles in addition to acting as Representatives:

  1. Our principal shareholder, Athanasios Baltzis, is the ultimate designated person, President, and Chairman of the Board of Directors of both WHS and WHAM.
  2. The board of directors of WHS is constituted of Athanasios Baltzis and Dimitri Kufedjian (who acts as a compliance officer for WHS). The board of directors of WHAM is constituted of Athanasios Baltzis, Dimitri Kufedjian and Richard Bernard (who acts as the CCO of WHAM).
  3. Athanasios Baltzis and Dimitri Kufedjian are actively involved in all aspects of the business of WhiteHaven, including operations and Compliance.

Referral Arrangements

WhiteHaven may perform trades while returning part of the commission to an unregistered representative (for example, a Client who referred to WhiteHaven the new client for whom a trade was done). Depending on the nature of the referred client, on the size of the account or on other business factors, WhiteHaven may remit a portion of the commission it should be benefiting from to the refferring unregistered representative. WhiteHaven will be performing all the work that qualifies as a registrable activity under applicable securities laws and as compensation for this work, WhiteHaven generally keeps a minimum of 20% of the commission that it receives and shares 80% of the commission with the referring party. For example, WhiteHaven shall complete the KYC with the new Client and ensure that any investment made on its behalf is suitable.

Compliance is notified of the referral arrangements involving a shared commission. Prior to accepting to act in furtherance thereof, Compliance reviews the file to ensure that all conflict of interests are controlled. Compliance also ensures that Representatives are performing their duties adequately and that all regulatory requirements are met and that all internal policies are respected.

Personal Trading

From time to time, some Representatives and Employees of WhiteHaven may invest in exempt market products distributed by WhiteHaven.

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