Proxy Voting Guidelines
1832 Asset Management L.P. ("1832"), in its capacity as manager, provides investment management and administrative services to, the Dynamic Funds, the MarquisPortfolio Solutions, the Marquis Institutional Solutions, the Dynamic Hedge Funds, the Hollis Wealth Pooled Funds, the Dynamic Venture Opportunities Fund Ltd., and the DPF India closed-end fund (each a "Fund", collectively the "Funds"). 1832 also provides investment management and administrative services to institutional clients.
Subject to compliance with applicable securities legislation, 1832, in its capacity as manager, acting on each Fund's behalf, has the right to vote proxies relating to the issuers of each Fund's portfolio securities. In certain circumstances, 1832 may delegate this function to a Fund's portfolio advisor or sub-advisor as part of such advisor' s discretionary authority to manage the Fund's assets. In all cases, proxies must be voted in a manner consistent with the best interests of the Fund and its securityholders. The proxy voting guidelines described below form an important part of 1832's fiduciary duty to maximize the long term value of each Fund for the benefit of its securityholders.
Generally, proxies will be voted with management of an issuer on routine business, otherwise a Fund will not own or maintain a position in the securities of that issuer. Examples of routine business applicable to an issuer are: voting on the size, nomination and election of the board of directors, and the appointment of auditors. All other special or non-routine matters will be assessed on a case-by-case basis with a focus on the potential impact of the vote on the value of a Fund's investment in that issuer.
Special or non-routine matters are brought to the attention of the portfolio manager(s) of the applicable Fund, and, after assessment, the portfolio manager(s) will direct that such matters be voted in a way that he or she believes will better protect or enhance the value of the investment for the Fund. Without limiting the generality of the foregoing, examples of special or non-routine business are: stock-based compensation plans, executive severance compensation arrangements, shareholders rights plans, corporate restructuring plans, going private transactions in connection with leveraged buyouts, lock-up arrangements, crown jewel defenses, supermajority approval proposals, and stakeholder or shareholder proposals.
1832's fundamental policy to vote proxies on behalf of a Fund in a manner consistent with the best interests of the Fund and its securityholders will always guide any proxy voting decision. If 1832, on behalf of a Fund, votes against management of an issuer on any particular proposal, whether routine or non-routine, and the Fund continues to own the security of such issuer, documentation of that vote is required along with a detailed explanation to be kept on file. In situations where a portfolio manager decides to vote securities held in his or her Fund account(s) differently from another portfolio manager(s) who holds the same security on behalf of another Fund, rationale for the differing vote is documented and kept on file. On occasion, a portfolio manager may abstain from voting a proxy or a specific proxy item when he or she concludes that the potential benefit of voting the proxy of that issuer is outweighed by the cost of voting the proxy. Such instances require that a detailed explanation be kept on file. All such documentation will be submitted to 1832's Portfolio Administrator of Proxy Voting (the "Portfolio Administrator") for filing and record-keeping.
In addition, 1832 will not vote proxies received for issuers of portfolio securities which are no longer held in a Fund's account. Pursuant to the requirements of securities legislation, 1832, on behalf of a Fund, will not vote any of the securities a Fund holds in underlying mutual funds managed by 1832 or any of its affiliates or associates (as such terms are defined in the Securities Act (Ontario)). However, 1832, in its sole discretion, may arrange for securityholders of a Fund to vote their share of those securities of the underlying mutual fund.
Under continuous oversight of the Manager of Portfolio Administration, the Portfolio Administrator is responsible for monitoring receipt of all proxies for securities for which 1832 has voting responsibility on behalf of a Fund. The Manager of Portfolio Administration develops and updates a list of matters 1832 treats as routine business, including instructions on how to vote on those matters on behalf of the Funds. The Manager of Portfolio Administration is responsible for ensuring that the Portfolio Administrator votes the Funds' proxies in accordance with 1832' s established instructions.
Generally, all proxy voting is done by the Portfolio Administrator, on behalf of 1832, or by the portfolio advisor or the sub-advisor, using ProxyEdge software which is administered by ADP Investor Communication Services, Inc. ("ADP"). The ProxyEdge software records all proxy voting actions taken on behalf of each Fund, including the relevant particulars for each issuer. Subject to the prior approval of 1832, a portfolio advisor or sub-advisor may instead submit to 1832 in paper format a Fund's proxy voting information for 1832 to provide to ADP. Such proxy voting information compiled by ADP will be included in each Fund's annual proxy voting record ("Proxy Voting Record") for the period ending on June 30th of each year.
Upon receipt of approval from the Canadian securities regulatory authorities, some of the Funds may hold common shares of Scotiabank or other related entities. There is the potential for a conflict of interest between the interests of the Funds and the interests of 1832 or its employees in connection with the exercise of voting rights of the Funds attached to the shares of Scotiabank or other related entities. There is also the potential for a conflict of interest in connection with the exercise of the Funds' voting rights attached to the shares of another issuer, where the outcome of the vote may directly impact the price of the shares of Scotiabank or other related entities.
Where proxy voting could give rise to a conflict of interest or perceived conflict of interest, in order to balance the interests of the Funds in voting proxies with the desire to avoid the perception of a conflict of interest, 1832 has instituted procedures to help ensure that a Fund's proxy is voted:
- In accordance with the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund; and
- Free from any influence by Scotiabank or another related entity and without taking into account any consideration relevant to Scotiabank or any of its associates or affiliates.
The procedures for voting issuers' proxies where there may be a conflict of interest include escalation of the issue to members of the Independent Review Committee, all of whom are independent of 1832, for its consideration and recommendation, although the responsibility for deciding how to vote a Fund's proxies and for exercising the vote remains with 1832.
A copy of these proxy voting guidelines and the most recent Proxy Voting Record for each Fund for the most recent period ended June 30 of each year will be available on www.dynamic.ca by August 31 of that year. This information will be sent, upon request, to securityholders of the Funds at any time after August 31 of that year.
If you have any questions, please contact the Legal & Compliance Department, 1832 Ltd., Dynamic Funds Tower, 1 Adelaide Street East, Toronto, Ontario, M5C 2V9.