Proposed Exemptions; Fortis, Inc. Employees' Uniform Profit
Sharing Plan (the Fortis Plan)
[Notices] [05/04/2000]
Proposed Exemptions; Fortis, Inc. Employees' Uniform Profit
Sharing Plan (the Fortis Plan)
[05/04/2000]
Volume 65, Number 87, Page 25954-25962
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Application No. D-10789, et al.]
Proposed Exemptions; Fortis, Inc. Employees' Uniform Profit
Sharing Plan (the Fortis Plan)
AGENCY: Pension and Welfare Benefits Administration, Labor.
ACTION: Notice of Proposed Exemptions.
-----------------------------------------------------------------------
SUMMARY: This document contains notices of pendency before the
Department of Labor (the Department) of proposed exemptions from
certain of the prohibited transaction restrictions of the Employee
Retirement Income Security Act of 1974 (the Act) and/or the Internal
Revenue Code of 1986 (the Code).
Written Comments and Hearing Requests
All interested persons are invited to submit written comments or
request for a hearing on the pending exemptions, unless otherwise
stated in the Notice of Proposed Exemption, within 45 days from the
date of publication of this Federal Register Notice. Comments and
requests for a hearing should state: (1) the name, address, and
telephone number of the person making the comment or request, and (2)
the nature of the person's interest in the exemption and the manner in
which the person would be adversely affected by the exemption. A
request for a hearing must also state the issues to be addressed and
include a general description of the evidence to be presented at the
hearing.
ADDRESSES: All written comments and request for a hearing (at least
three copies) should be sent to the Pension and Welfare Benefits
Administration, Office of Exemption Determinations, Room N-5649, U.S.
Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C.
20210. Attention: Application No.__, stated in each Notice of Proposed
Exemption. The applications for exemption and the comments received
will be available for public inspection in the Public Documents Room of
the Pension and Welfare Benefits Administration, U.S. Department of
Labor, Room N-5638, 200 Constitution Avenue, N.W., Washington, D.C.
20210.
Notice to Interested Persons
Notice of the proposed exemptions will be provided to all
interested persons in the manner agreed upon by the applicant and the
Department within 15 days of the date of publication in the Federal
Register. Such notice shall include a copy of the notice of proposed
exemption as published in the Federal Register and shall inform
interested persons of their right to comment and to request a hearing
(where appropriate).
SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in
applications filed pursuant to section 408(a) of the Act and/or section
4975(c)(2) of the Code, and in accordance with procedures set forth in
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990).
Effective December 31, 1978, section 102 of Reorganization Plan No. 4
of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of the
Secretary of the Treasury to issue exemptions of the type requested to
the Secretary of Labor. Therefore, these notices of proposed exemption
are issued solely by the Department.
The applications contain representations with regard to the
proposed exemptions which are summarized below. Interested persons are
referred to the applications on file with the Department for a complete
statement of the facts and representations.
Fortis, Inc. Employees' Uniform Profit Sharing Plan (the Fortis
Plan) Located in New York, New York
[Application Number D-10789]
Proposed Exemption
The Department is considering granting an exemption under the
authority of section 408(a) of the Act and section 4975 (c)(2) of the
Code and in accordance with the procedures set forth in 29 CFR Part
2570, Subpart B (55 FR 32826, 32847, August 10, 1990). If the exemption
is granted, the restrictions of sections 406(a), 406(b)(1) and (2) of
the Act and the sanctions resulting from the application of section
4975 of the Code, by reason of section 4975(c)(1)(A) through (E) of the
Code, shall not apply to: (1) The restoration payment (the Restoration
Payment) by Fortis, a party in interest with respect to the Fortis Plan
to the Fortis Plan with respect to a certain counterfeit certificate of
deposit (the Plan CD); and (2) the potential future payment to Fortis
of recapture payments (the Recapture Payments) made to the Fortis Plan
pursuant to proceedings involving the issuer of the counterfeit CD.
This exemption is subject to the following conditions:
(A) The Restoration Payment consists of:
(i) $501,125, an amount equal to the Plan CD's full face value at
the time of the Plan CD's maturity; and
(ii) An amount in cash which is equal to:
(a) A 5.5% annual rate of return on the Plan CD's maturity value of
$501,125 for the period beginning October 30, 1997 and ending on
December 31, 1998; and
(b) A rate of return on the amount described in (A)(ii)(a) above
which is equal to the average annual rate of return of the Fortis Money
Market Fund from January 1, 1999 until the date of
[[Page 25955]]
the Restoration Payment (i.e., the Interest Payment);
(B) The Restoration Payment is a one-time transaction for cash;
(C) The Fortis Plan pays no expenses with respect to the
Restoration Payment;
(D) The Fortis Plan retains any amount in excess of the Restoration
Payment that it collects in its attempts to recover monies due under
the Plan CD; and
(E) Any Recapture Payments paid by the Fortis Plan to Fortis are
limited to the amount of the Restoration Payment and are restricted
solely to the amounts, if any recovered, by the Fortis Plan with
respect to the counterfeit CD in litigation or otherwise.
Summary of Facts and Representations
1. Fortis, a diversified financial services company providing
insurance and investment products, is a Nevada corporation, with its
principal office located in New York, New York. Fortis is the sponsor
of the Plan which is a profit sharing plan having approximately 12,000
participants and approximately $366 million in assets as of May 11,
1999.
2. Interfinancial, Inc. (Interfinancial), a Georgia Corporation
whose function is merely to hold the stock of subsidiary operating
companies, is a subsidiary of Fortis. On August 31, 1998,
Interfinancial acquired the John Alden Life Insurance Company (John
Alden), the sponsor of the John Alden Employee Savings Incentive Plan
(the Alden Plan), a defined contribution plan.
Under the Alden Plan, participants could direct the investment of
their accounts among various investment options selected by the John
Alden Asset Management Company (JAAMCO), a subisidiary of John Alden.
JAAMCO managed the investment of the Alden Plan assets. According
to the Alden Plan's ``Policy and Procedures,'' the Money Market Fund
was to consist of money market instruments such as bank certificates of
deposits, commercial paper, and bonds. Portfolio managers were
permitted to purchase CDs issued by pre-approved entities, which
included Deutsche Bank.
The Plan CD was a certificate of deposit offered to the Alden Plan
by Charles Bradley McCoskey, a securities broker with Tri-Star
Financial, a securities firm located in Houston, Texas. The Plan CD was
represented as an obligation of the Deutsche Bank Argentina, S.A. to
``Robert W. Hallock/Himmel & Grund LLC.'' Annexed to the Plan CD was an
``Irrevocable Stock/Bond Power bearing the signature of ``Robert W.
Hallock/Himmel & Grund LLC.'' The Plan CD had a 5.5% coupon and a
maturity date of October 30, 1997. JAAMCO purchased, on behalf of the
John Alden Money Market Fund, the Plan CD on January 10, 1997 for
$475,403.75 and anticipated the receipt of $501,125 on October 30,
1997, the Plan CD's maturity date. At the time of the purchase, the
Plan CD comprised approximately 0.61% percent of the Alden Plan's
assets.
3. On May 5, 1997, the Securities Exchange Commission (SEC) issued
a subpoena which demanded the production of the Plan CD. Subsequently,
the SEC informed the Alden Plan that the Plan CD was counterfeit. The
applicant represents that John Alden, on behalf of the Alden Plan,
conducted an investigation and retained counsel to recoup the value of
the Plan CD from the culpable parties. The applicant further represents
that John Alden subsequently obtained a settlement judgment (the
Settlement Judgment) against Robert W. Hallock for the recovery of
monies due the Alden Plan under the Plan CD. The applicant represents
that, despite the Settlement Judgment, the Alden Plan did not recover
any of the monies due the Alden Plan under the Plan CD.
The Alden Plan and the Fortis Plan merged on December 31, 1998. As
a result, the Plan CD was transferred from the Alden Plan to the Fortis
Plan and the portion of each Alden Plan participant's account allocated
to the Plan CD was frozen. The applicant represents that Fortis, on
behalf of the Fortis Plan, endeavored to recover the monies due the
Fortis Plan. In this regard, the applicant represents that currently
the Fortis Plan has not been successful in recovering any of the monies
due the Fortis Plan as a result of the Fortis Plan's ownership of the
Plan CD. The applicant represents, however, that in the event that the
Fortis Plan recovers monies on the Plan CD which are in excess of the
Plan CD's maturity value, the Fortis Plan will retain that excess
amount. Accordingly, Fortis and the Fortis Plan have signed an
agreement to this effect.
4. The applicant proposes the Restoration Payment by Fortis to the
Fortis Plan with respect to the Plan CD. The applicant proposes that
the Restoration Payment include both a payment of the Plan CD's
maturity value (the Maturity Value Payment) and a payment of interest
(the Interest Payment). In this regard, the applicant states that the
Plan CD had a face value of $501,125 as of its October 30, 1997
maturity date. As a result, the applicant proposes that the Maturity
Value Payment equal $501,125.
The applicant proposes that the Interest Payment consist of two
components. First, the Interest Payment equals a 5.5% annual rate of
return on the maturity value amount for the period beginning October
30, 1997 and ending on December 31, 1998. \1\
---------------------------------------------------------------------------
\1\ The applicant represents that the 5.5% annual rate is
derived from the following: (1) The average rate of return on the
John Alden Money Market Fund for 1998 was 5.483%; and (2) the
average rate of return on the short-term funds within the John Alden
Money Market Fund for 1998 was 5.46%.
---------------------------------------------------------------------------
Thereafter, from January 1, 1999 until the date of the Restoration
Payment, the Interest Payment will equal the rate of return on the
Fortis Money Market Fund.\2\
---------------------------------------------------------------------------
\2\ In this regard, the applicant states that when the Alden
Plan merged into the Fortis Plan as of the end of December 31, 1998,
the John Alden Money Market Fund (other than the Plan CD) was
liquidated. Accordingly, the money market fund under the Fortis Plan
became available.
---------------------------------------------------------------------------
5. In addition, the Recapture Payment shall consist of any monies
recovered due on the Plan CD up to the Restoration Payment amount, of
which the Fortis Plan will be required to refund these monies to
Fortis. Specifically, the Recapture Payment would include any amount
recovered up to the $501,125 plus the Interest Payment.
6. The applicant represents that, in connection with Fortis'
acquisition of John Alden, Fortis has discontinued John Alden's asset
management operations. The applicant further notes that the portfolio
manager responsible for the purchase of the Plan CD, his supervisor,
and most John Alden employees, who might have knowledge about the Plan
CD purchase, are no longer employed by any Fortis company.
7. The applicant represents that the proposed transaction is
feasible since it involves a one-time transaction for cash.
Furthermore, the applicant represents that the proposed transaction is
protective of the rights of participants and beneficiaries since the
Restoration Payment would ensure that the Fortis Plan recovers the Plan
CD's full maturity value despite the uncertainty of any recovery from
the Settlement Judgment. Finally, the applicant represents that the
proposed transaction is in the best interests of the Plan and its
participants and beneficiaries since the Interest Payment enables the
Fortis Plan to receive a rate of return on the Plan CD which is
comparable to that which it would have received if the Plan CD had not
been a counterfeit and the rate of return the money market funds (John
Alden, 5.5% and the average annual return on Fortis) earned during the
applicable time frames.
[[Page 25956]]
8. The applicant represents that once the proposed transaction is
consummated, the cash proceeds from the transaction will be allocated
to the accounts of the affected participants, in accordance with their
direction. The applicant further represents that the proposed
transaction does not violate the requirements set forth in section 415
of the Code.
9. In summary, the applicant represents that the proposed
transaction satisfies the statutory criteria for an exemption under
section 408(a) and section 4975(c)(2) of the Code because:
(A) The Restoration Payment consists of:
(i) $501,125, an amount equal to the Plan CD's full face value at
the time of the Plan CD's maturity; and
(ii) An amount in cash which is equal to:
(a) A 5.5% annual rate of return on the Plan CD's maturity value of
$501,125 for the period beginning October 30, 1997 an ending on
December 31, 1998; and
(b) A rate of return on the amount described in (A)(ii)(a) above
which is equal to the average annual rate of return of the Fortis Money
Market Fund from January 1, 1999 until the date of the Restoration
Payment (i.e., the Interest Payment);
(B) The Restoration Payment is a one-time transaction for cash;
(C) The Fortis Plan pays no expenses with respect to the
Restoration Payment;
(D) The Fortis Plan retains any amount in excess of the Restoration
Payment that it collects in its attempts to recover monies due under
the Plan CD; and
(E) Any Recapture Payments paid by the Fortis Plan to Fortis are
limited to the amount of the Restoration Payment and are restricted
solely to the amounts, if any recovered, by the Fortis Plan with
respect to the counterfeit CD in litigation or otherwise.
FOR FURTHER INFORMATION CONTACT: Mr. J. Martin Jara, telephone (202)
219-8881. (This is not a toll-free number).
Canada Life Assurance Company (Canada Life) Located in Toronto,
Ontario, Canada
[Application No. D-10790]
Proposed Exemption
Based on the facts and representations set forth in the
application, the Department is considering granting an exemption under
the authority of section 408(a) of the Act and in accordance with the
procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836,
32847, August 10, 1990).\3\
---------------------------------------------------------------------------
\3\ For purposes of this proposed exemption, reference to
provisions of Title I of the Act, unless otherwise specified refer
also to the corresponding provisions of the Code.
---------------------------------------------------------------------------
Section I. Covered Transactions
If the exemption is granted, the restrictions of section 406(a) of
the Act and the sanctions resulting from the application of section
4975 of the Code, by reason of section 4975(c)(1)(A) through (D) of the
Code, shall not apply, effective November 4, 1999, to the (1) receipt
of common shares (the Common Shares) of Canada Life Financial
Corporation, the holding company for Canada Life (the Holding Company),
or (2) the receipt of cash (the Cash) or policy credits (the Policy
Credits), by or on behalf of any eligible policyholder (the Eligible
Policyholder) of Canada Life which is an employee benefit plan (the
Plan), subject to applicable provisions of the Act and/or the Code,
other than a Plan established by Canada Life or an affiliate for its
own employees (the Canada Life Plan), in exchange for such Eligible
Policyholder's membership interest in Canada Life, in accordance with
the terms of a conversion proposal (the Conversion Proposal) adopted by
Canada Life and implemented under the insurance laws of Canada and the
State of Michigan.
This proposed exemption is subject to the conditions set forth
below in Section II.
Section II. General Conditions
(a) The Conversion Proposal was implemented in accordance with
procedural and substantive safeguards that were imposed under the
insurance laws of Canada and the State of Michigan and was subject to
review and/or approval in Canada by the Office of the Superintendent of
Financial Institutions (OSFI) and the Minister of Finance (the Canadian
Minister of Finance) and, in the State of Michigan, by the Commissioner
of Insurance (the Michigan Insurance Commissioner).
(b) OSFI, the Canadian Finance Minister and the Michigan Insurance
Commissioner reviewed the terms of the options that were provided to
Eligible Policyholders of Canada Life as part of their separate reviews
of the Conversion Proposal. In this regard, (1) OFSI (i) authorized the
release of the Conversion Proposal and all information to be sent to
Eligible Policyholders; (ii) oversaw each step of the conversion
process (the Conversion); and (iii) made a final recommendation to the
Canadian Finance Minister on the Conversion Proposal.
(2) The Canadian Finance Minister, in his sole discretion, could
consider such factors as (i) whether the Conversion Proposal was fair
and equitable to Eligible Policyholders; (ii) whether the Conversion
Proposal was in the best interests of the financial system in Canada;
and (iii) if sufficient steps had been taken to inform Eligible
Policyholders of the Conversion Proposal and of the special meeting on
Conversion.
(3) The Michigan Insurance Commissioner made a determination that
the Conversion Proposal was (i) fair and equitable to all Eligible
Policyholders and (ii) consistent with the requirements of Michigan
law.
(4) Both the Canadian Finance Minister and the Michigan Insurance
Commissioner concurred on the terms of the Conversion Proposal.
(c) Each Eligible Policyholder had an opportunity to vote to
approve the Conversion Proposal after full written disclosure was given
to the Eligible Policyholder by Canada Life.
(d) One or more independent fiduciaries of a Plan that was an
Eligible Policyholder received Common Shares, Cash or Policy Credits
pursuant to the terms of the Conversion Proposal and neither Canada
Life nor any of its affiliates exercised any discretion or provided
``investment advice,'' as that term is defined in 29 CFR 2510.3-21(c),
with respect to such acquisition.
(e) After each Eligible Policyholder was allocated 100 Common
Shares, additional consideration was allocated to such Eligible
Policyholder who owned an eligible policy based on an actuarial formula
that took into account such factors as the total cash value, the basic
annual premium and the duration of such eligible policy. The actuarial
formula was reviewed by the Canadian Finance Minister and the Michigan
Insurance Commissioner.
(f) All Eligible Policyholders that were Plans participated in the
transactions on the same basis within their class groupings as other
Eligible Policyholders that were not Plans.
(g) No Eligible Policyholder paid or will pay any brokerage
commissions or fees to Canada Life or its affiliates in connection with
their receipt of Common Shares, in connection with the implementation
of the secondary offering (the Share Sale Service) or the assisted
sales program (the Assisted Sales Program).
(h) All of Canada Life's policyholder obligations will remain in
force and will not be affected by the Conversion Proposal.
[[Page 25957]]
Section III. Definitions
For purposes of this proposed exemption:
(a) The term ``Canada Life'' means The Canada Life Assurance
Company and any affiliate of Canada Life as defined in paragraph (b) of
this Section III.
(b) An ``affiliate'' of Canada Life includes --
(1) Any person directly or indirectly through one or more
intermediaries, controlling, controlled by, or under common control
with Canada Life; (For purposes of this paragraph, the term ``control''
means the power to exercise a controlling influence over the management
or policies of a person other than an individual.) or
(2) Any officer, director or partner in such person.
(c) The term ``Eligible Policyholder'' means a policyholder who--
(i) Was the owner of a voting policy at any time on April 2, 1998
(the Eligibility Day);
(ii) Became the owner of a voting policy, if the voting policy was
applied for by that person before the Eligibility Day, and the
application was received by Canada Life on or before the close of
business on June 30, 1998; or
(iii) Was the owner of a voting policy that lapsed before June 2,
1998 and, where the policy terms provided that, as of June 2, 1998, the
owner was entitled to request that the policy be reinstated, the policy
was reinstated by the person who was the owner at the time the policy
lapsed in accordance with its terms (without regard to when the right
to reinstate expired) during the period which began on April 2, 1998
and ended 90 days before the special meeting.
(d) The term ``Policy Credit'' means --
(1) For an individual life insurance policy with respect to which
dividends may be paid, dividend deposits when the dividend deposit
option has been selected under the policy and, in all other cases,
dividend additions;
(2) For in individual life insurance policy other than a policy
with respect to which dividends may be paid, an increase in the fund
value (to which no sales or surrender or similar charges will be
applied);
(3) For an individual deferred annuity policy with respect to which
dividends may be paid, dividend additions;
(4) For an individual deferred annuity policy other than a policy
with respect to which dividends may be paid, an increase in
accumulation value (to which no sales or surrender or similar charges
will be applied); and
(5) For a supplementary contract, settlement option or annuity in
annuitization status, an increase in the periodic annuity payment
amount. If the periodic annuity payment is on a life basis, the
increase will be on a life annuity with cash refund basis.
EFFECTIVE DATE: If granted, this proposed exemption will be effective
as of November 4, 1999.
Summary of Facts and Representations
1. Canada Life, Canada's oldest domestic life insurer, was
established in 1847 and incorporated in 1849 by a Special Act of the
Canadian Parliament. In 1962, Canada Life became a mutual life
insurance company and it remained that way until November 4, 1999,
which is the effective date (the Effective Date) of the Conversion
transaction described herein. Canada Life is currently headquartered at
330 University Avenue, Toronto, Ontario, Canada. It is subject to the
Insurance Companies Act of Canada (ICA) as well as the regulatory
authority of OSFI. Currently, Canada Life is rated by national ratings
firms as follows: Duff & Phelps, AA+; Moody's Investors Service, Aa3;
Standard & Poor's, AA; and A.M. Best Company, AA+. During 1998, Canada
Life had total assets under administration of $47.4 billion and $2.7
billion in policyholders' equity.
Although Canada Life's principal place of business in the United
States is 6201 Powers Ferry Road, N.W., Atlanta, Georgia, it uses the
State of Michigan as its port of entry for its operations in the United
States. Therefore, Canada Life is also subject to the insurance laws of
the State of Michigan and to regulation within the United States, by
the Michigan Department of Insurance (the Michigan Insurance Bureau).
2. Canada Life carries on its insurance business in Canada and
internationally through branch operations in the United States, the
United Kingdom and Ireland. In addition, Canada Life serves over 8
million people under individual and group contracts in these areas.
Moreover, Canada Life provides life insurance, health insurance,
property and automobile insurance, investment management and related
services through various subsidiaries located in Canada and worldwide.
The insurance business that Canada Life carries on directly in Canada
and through its international branch operations includes the sale of
individual and group life, disability, health and dental insurance,
annuities and pension products.
3. As a mutual life insurance company, Canada Life had no issued or
outstanding capital stock. Instead, Canada Life's ``products'' included
policies entitling holders to participate in its profits (the
Participating Policies) as well as other policies that did not
generally so entitle the holders (the Non-Participating Policies).
Aside from the contractual right to receive policy benefits (i.e.,
payment under the terms of the policy), the holders of Participating
Policies (the Participating Policyholders) possessed certain other
rights with respect to, and interests in, Canada Life as a mutual
company, including the right to vote at Canada Life meetings.\4\ In
addition, Participating Policyholders had the right to receive bonuses
or policyholder dividends when declared by Canada Life's Board of
Directors and an inchoate right to participate in Conversion benefits
(the Conversion Benefits). Further, if Canada Life was liquidated, the
Participating Policyholders would be entitled to share in the insurer's
residual assets after all claims assessed against the insurer had been
satisfied in full.
---------------------------------------------------------------------------
\4\ Voting rights included the right to vote on such matters as
the review and approval of Canada Life's annual financial
statements, the election of directors, the appointment of Canada
Life's auditors and the approval of certain fundamental changes,
including the Conversion.
---------------------------------------------------------------------------
4. Canada Life's Participating Policies included, without
limitation, policies that qualified for tax-favored status in the
United States, such as policies issued as tax-deferred annuities under
section 403(b) of the Code and individual retirement annuities under
section 408(b) of the Code. In addition, the Participating Policies
covered, without limitation, certain tax-exempt entities in the United
States such as tax-qualified retirement plans within the meaning of
section 401(a) of the Code. Participating Policyholders included
individuals, corporations, trusts and other persons who were residents
for tax purposes in Canada, the United States, the United Kingdom,
Ireland and elsewhere.
The Decision To Demutualize
5. On April 2, 1998, Canada Life issued a press release stating
that its Board of Directors had requested the insurer's management to
develop a plan to convert Canada Life from a mutual life insurance
company to a publicly-traded stock company, whose Common Shares are
listed on the Toronto Stock Exchange and the Montreal Stock Exchange,
through a process known as ``demutualization.'' Canada Life believed
that as a result of the flexibility offered by the stock company
structure and the access to capital markets, it would be in a position
to enhance its market leadership, financial strength and strategic
position. Moreover, the
[[Page 25958]]
insurer could aggressively pursue opportunities for growth, thereby
providing greater protection to policyholders.
In November 1998, a bill was introduced in the Canadian Parliament
to amend the ICA to set forth the statutory rules allowing the
demutualization of Canadian mutual life insurance companies with assets
in Canada of CDN $7.5 billion or more. When the bill was introduced,
the Canadian Department of Finance reported that each of Canada's four
large mutual life insurance companies had already announced its
intention to develop demutualization plans in order to improve the
efficiency and competitiveness of their companies through increased
flexibility to access capital, to gain greater market scrutiny and to
achieve a better understood corporate structure. Therefore, on March
13, 1999, the Canadian Government enacted the ICA amendments permitting
the demutualization of large Canadian mutual life insurance companies.
The Canadian Department of Finance subsequently released ``Mutual
Company (Life Insurance) Conversion Regulations'' (the Conversion
Regulations) which became effective on March 12, 1999 and implemented
the new legislation.
On November 4, 1999, Canada Life demutualized. As a result of the
Conversion, Canada Life became a stock insurer and a subsidiary of
Canada Life Financial Corporation, a newly-formed holding company. The
reorganization provided economic value to Eligible Policyholders in the
form of shares of stock of the Holding Company (i.e., the Common
Shares), Cash or Policy Credits, in exchange for their respective
ownership rights (the Ownership Rights) in Canada Life.
6. Therefore, Canada Life requests an administrative exemption from
the Department that would cover the receipt of Common Shares, Policy
Credits or Cash by Eligible Policyholders which are trusteed and non-
trusteed Plans, other than Canada Life Plans,\5\ in exchange for their
mutual membership interests in Canada Life. If granted, the proposed
exemption would be effective as of November 4, 1999, the Effective Date
of the Conversion.
---------------------------------------------------------------------------
\5\ Canada Life determined that the Canada Life Plans were not
Eligible Policyholders. Therefore, these Plans did not receive any
consideration as a result of Canada Life's Conversion.
---------------------------------------------------------------------------
Canada Life represents that it is not a party in interest with
respect to a Plan policyholder merely because it has issued an
insurance policy to such Plan. However, Canada Life represents that
both it and its affiliates have provided a variety of fiduciary and
other services to Plans which are also Canada Life policyholders.
Canada Life further represents that the provision of such services to
Plan policyholders causes it to be a party in interest with respect to
such Plans under section 3(14)(A) and (B) of the Act or the related
``derivative'' provisions of this section.
The proposed exemption includes a requirement that all Eligible
Policyholders that were Plans participated in the transactions on the
same basis within their class groupings as other Eligible Policyholders
that were not Plans. Thus, Canada Life did not treat Plan policyholders
any differently from non-Plan policyholders within their respective
class groupings.
Regulatory Supervision
7. The various steps of the Conversion were subject to the approval
of Canada Life's Board of Directors, the OSFI, the Canadian Finance
Minister, the Michigan Insurance Commissioner, and other regulatory
authorities in the United Kingdom and Ireland. In pertinent part, the
Conversion Regulations required that the conversion of a mutual life
insurance company be implemented in accordance with a detailed proposal
that sets forth the terms and means of effecting the demutualization.
In accordance with this requirement, on July 8, 1999, Canada Life's
Board of Directors formally adopted the Conversion Proposal which
permitted Canada Life to demutualize and convert into a stock life
insurance company pursuant to section 237 et seq. of the ICA, the
Conversion Regulations and the terms of such Proposal.
Also, on July 8, 1999, Canada Life provided to OSFI, which had
oversight responsibility for the entire demutualization process, a
draft of the Conversion Proposal for review. OSFI reviewed and
commented on the Conversion Proposal and, on July 16, 1999, authorized
the Board to vote on the Conversion Proposal and to send Eligible
Policyholders notice of a special meeting to consider such Proposal.
On September 16, 1999, the special meeting of Eligible
Policyholders was held in Toronto, Ontario, Canada. Approximately
388,000 Eligible Policyholders were entitled to vote on the Conversion
Proposal. Of this total, approximately 40,000 Eligible Policyholders
resided in the United States and less than one percent of the Eligible
Policyholders were Plans. When the vote was tallied, more than 99.1
percent of the Eligible Policyholders who voted on the Conversion
Proposal voted to approve such Proposal.\6\ Following the special
meeting, the Directors of Canada Life applied to the Canadian Finance
Minister for approval of the Conversion Proposal and issuance of
Letters Patent to effect the Conversion.
---------------------------------------------------------------------------
\6\ Under the ICA, the Conversion Proposal must be approved by
the Eligible Policyholders, each of whom is entitled to one vote
irrespective of the number or size of Policies held.
---------------------------------------------------------------------------
Canadian law did not require that the Canadian Finance Minister
make any particular findings in deciding whether to approve the
Conversion Proposal. Therefore, approval was entirely within the
discretion of such Minister. However, the Canadian Finance Minister, in
deciding to approve the Conversion Proposal, could consider such
factors as (a) whether the Conversion Proposal was fair and equitable
to policyholders; (b) whether the Conversion Proposal was in the best
interest of the financial system in Canada; and (c) whether sufficient
steps had been taken to inform policyholders of the Conversion Proposal
and of the special meeting on the Conversion.
8. Because Canada Life operates in the United States through its
U.S. branch under the Michigan State of Entry Statute, the laws of
Michigan regarding demutualization (the Michigan Demutualization Law)
were also applicable to Canada Life's demutualization. The requirements
of Michigan Demutualization Law are similar to those of the ICA and the
Conversion Regulations. Among other things, the Statute provides that
the Conversion Proposal be submitted to the Michigan Insurance
Commissioner prior to a vote by Canada's Eligible Policyholders. In
addition, the Michigan Demutualization Law states that the Conversion
Proposal cannot become effective without the approval of the Michigan
Insurance Commissioner following a public hearing and it cannot be
amended without the prior approval of such Commissioner.
The Michigan Insurance Commissioner was authorized to retain, and
did retain, independent legal and actuarial advisers to assist in
reviewing the Conversion Proposal. Under the Michigan Demutualization
Law, the Michigan Insurance Commissioner could approve or disapprove
the Conversion Proposal within 90 days after its submission, and could
not approve it unless he found the Conversion Proposal did not
prejudice the interests of its members, was fair and equitable, and was
not inconsistent with the purpose and intent of the Michigan
Demutualization Law. If
[[Page 25959]]
approved, the Conversion would take effect as of the Effective Date
specified in the Conversion Proposal.
In accordance with Michigan law, on or about July 26, 1999, Canada
Life mailed notice of the public hearing to all U.S. resident Eligible
Policyholders. The Michigan Insurance Bureau also published notice of
the hearing in the Wall Street Journal on August 5, 1999 as well as in
three newspapers that are published in different areas of the State of
Michigan on August 7, 1999. Then, on August 23, 1999, the Michigan
Insurance Bureau conducted a public hearing with respect to the
Conversion Proposal. Finally, on September 3, 1999, the Michigan
Insurance Commissioner approved the Conversion Proposal.
The Transaction
9. As noted above, the Conversion Proposal provided for Canada Life
to demutualize and convert to a stock life insurance company under
section 237 et seq. of the ICA, the Conversion Regulations and the
terms of the Conversion Proposal. To this end, in advance of the
Conversion, Canada Life incorporated the Holding Company in Canada
under the ICA as a new stock holding company. Thus, in accordance with
section 5.03 of the Conversion Proposal, the following transactions,
among others, occurred on November 4, 1999, the Effective Date of the
Conversion:
<bullet> Change in Business Structure. Canada Life ceased to be
a mutual life insurance company and became a life insurance company
with Common Shares under the ICA. The policyholders of Canada Life
ceased to have any rights with respect to or any interest in Canada
Life as a mutual life insurance company and the Eligible
Policyholders were entitled to receive Conversion Benefits.
<bullet> Issuance of Common Shares to the Holding Company.
Canada Life issued 160 million Common Shares to the Holding Company.
<bullet> Issuance of Consideration to Eligible Policyholders.
The Holding Company issued Common Shares to Eligible Policyholders
and made Cash payments to other Eligible Policyholders. In addition,
Canada Life issued Policy Credits to Eligible Policyholders in
accordance with the allocation and distribution rules set forth in
the Conversion Proposal.
<bullet> Sale and Cancellation of Common Share and Preferred
Share (the Preferred Share) by the Holding Company. At the time the
Holding Company was initially capitalized, it issued one Preferred
Share and one Common Share to Canada Life in exchange for CDN$10
million and CDN$1, respectively. However at the time of the
Conversion, the amount of capital was repaid to Canada Life by the
Holding Company and the Preferred Share and the Common Share were
canceled. Under Canada law, Canada Life was required to capitalize
the Holding Company with at least CDN$10 million. Therefore, Canada
Life received the Preferred Share in exchange for the CDN$10 million
capital contribution to help ensure that the repayment of the
capital to Canada Life at the time of the demutualization would not
be a taxable event in Canada.
10. Following the Conversion, all policies generally remained in
force as policies of Canada Life, and all policy premiums, benefits,
values, guarantees, or other policy obligations remained unchanged,
except that policies credited with Policy Credits were enhanced by such
Credits. Dividends would continue to be declared with respect to the
Participating Policies at the discretion of Canada Life's Board of
Directors. Accordingly, the Conversion would not adversely affect the
contractual rights of any Participating Policyholder whose former
ownership rights in the mutual insurer were extinguished.
11. Most Eligible Policyholders, including Eligible Policyholders
that were Plans covered under the provisions of the Act, initially
received Conversion Benefits in the form of Common Shares issued by the
Holding Company.\7\ Fewer than 10 percent of the Eligible Policyholders
received Conversion Benefits in the form of Cash or Policy Credits.
---------------------------------------------------------------------------
\7\ However, as noted herein, Eligible Policyholders residing
outside Canada could elect to sell their Common Shares in an initial
public offering (the IPO) under the Share Sale Service Program which
was offered contemporaneously with the Conversion.
---------------------------------------------------------------------------
Section 8.02(a) of the Conversion Proposal provides that Eligible
Policyholders which are not residents of the United States, the United
Kingdom, Canada or Ireland, as well as governments or agents thereof,
would be entitled to receive Cash distributions from Canada Life as a
result of its Conversion. In addition, under section 8.02(b) of the
Conversion Proposal, certain individuals which are Eligible
Policyholders in the United States with certain tax-qualified
retirement contracts would be credited with Policy Credits.
Specifically, Policy Credits would be posted to each Eligible
Policyholder in the United States whose Participating Policy was--
<bullet> An individual retirement annuity policy within the
meaning of section 408(b) of the Code or a tax sheltered annuity
policy within the meaning of section 403(b) of the Code;
<bullet> An individual retirement annuity policy that had been
issued directly to the Plan participant pursuant to a plan qualified
under section 401(a) of the Code or pursuant to a Plan described in
section 403(a) of the Code;
<bullet> An individual life insurance policy that had been
issued directly to the plan qualified under section 401(a) of the
Code; or
Also, included within the category entitled to receive Policy
Credits were custodial accounts under section 403(b)(7) of the Code and
retirement accounts under section 403(b)(9) of the Code.
Further, Policy Credits were posted to each Eligible Policyholder
with respect to whom Canada Life's Board of Directors determined that
the receipt of Conversion Benefits in the form of Cash or Common Shares
would be disadvantageous for such Eligible Policyholder, provided that
such Eligible Policyholder received notification of such determination.
Eligible Policyholders holding certain tax-qualified retirement
contracts ending after April 2, 1998 and before the Conversion,
received Common Shares and could elect to sell those shares in the
IPO.\8\
---------------------------------------------------------------------------
\8\ Consistent with sections 1 and 4(1)(e)(i) of the Conversion
Regulations, the Conversion Proposal generally provides that the
policyholder eligible to participate in the distribution of Common
Shares, Cash or Policy Credits resulting from the Conversion
Proposal is the ``owner'' of any policy shall generally be
determined on the basis of the records of Canada Life. Canada Life
further represents that an insurance or annuity policy that provides
benefits under an employee benefit plan, typically designates the
employer that sponsors the plan, or a trustee acting on behalf of
the plan, as the owner of the policy. In regard to insurance or
annuity policies that designate the employer or trustee as owner of
the policy, Canada Life represents that it was required under the
foregoing provisions of Canadian Law and the Conversion Proposal to
make distributions resulting from such Plan to the employer or
trustee as owner of the policy.
In general, it is the Department's view that, if an insurance
policy (including an annuity contract) is purchased with assets of
an employee benefit plan, including participant contributions, and
if there exist any participants covered under the plan (as defined
at 29 CFR 2510.3-3) at the time when Canada Life incurred the
obligation to distribute Common Shares, Cash or Policy Credits, then
such consideration would constitute an asset of such plan. Under
these circumstances, the appropriate plan fiduciaries must take all
necessary steps to safeguard the assets of the plan in order to
avoid engaging in a violation of the fiduciary responsibility
provisions of the Act.
---------------------------------------------------------------------------
12. The aggregate amount of Conversion Benefits provided to
Eligible Policyholders in the Conversion and the allocation of such
Benefits among Eligible Policyholders was determined by an actuary
employed by Canada Life. The total amount of Conversion Benefits
received by each Eligible Policyholder varied and took into account
such factors as the basic annual premium, the duration and the total
cash value of the relevant Participating Policy, but included a fixed
component equal to the value of 100 Common Shares.
Pursuant to the ICA, the Conversion Proposal was accompanied by an
[[Page 25960]]
opinion prepared by the actuary for Canada Life and an opinion prepared
by an independent actuary to the effect that the allocation of benefits
to Eligible Policyholders in the Conversion was fair and equitable to
Eligible Policyholders. The Common Shares, Cash or Policy Credits
distributed in the Conversion had a fair market value equal to the fair
market value of the Ownership Rights that ceased in connection with the
Conversion.
13. Approximately 57 percent of Canada Life's Eligible
Policyholders were Canadian residents, 9 percent were United States
residents, 20 percent were residents of the United Kingdom and 14
percent were residents of Ireland. While United States residents
constituted roughly 9 percent of the total number of Eligible
Policyholders, Canada Life projected that United States citizens would
receive roughly 18 percent of the total Common Shares and other
Conversion Benefits that were distributed by Canada Life.\9\
---------------------------------------------------------------------------
\9\ The differences between the relative numbers of Eligible
Policyholders residing in each country and the estimated percentages
of total Conversion Benefits to be distributed to Eligible
Policyholders who resided in each covered country were attributed by
Canada Life to the fact that Conversion Benefits were allocated in
part based on such factors as the type, duration, face amount and
cash surrender value of an eligible policy, and not simply on a per
capita basis.
---------------------------------------------------------------------------
14. In connection with the Conversion, the Holding Company held an
IPO of Common Shares to Canadian investors and a private placement of
Common Shares to large institutional investors located in the United
States and elsewhere. The Common Shares were offered at an initial
share price of CDN$17.50 per share.
The private placement involved the sale by certain underwriters
(the Underwriters), which were unrelated to Canada Life and its
affiliates, to the investors (the Investors) of Common Shares the
Underwriters had purchased previously from Eligible Policyholders who
resided outside of Canada and who had elected to sell their Common
Shares for Cash. Such purchases occurred at the initial share price of
CDN$17.50 per share. In addition, the private placement involved the
sale by the Underwriters to the Investors of newly-issued Common Shares
(the Primary Shares) the Underwriters had purchased from the Holding
Company in a primary offering (the Primary Offering).
The proceeds of the IPO were (a) initially paid to Eligible
Policyholders who were eligible to receive a cash payment pursuant to
section 8.03(b) of the Conversion Proposal and contributed by the
Holding Company to Canada Life in an amount sufficient to enable Canada
Life to credit Policy Credits; (b) then retained by the Holding Company
in an amount sufficient to recoup the costs incurred by the Holding
Company in purchasing Common Shares from Canadian Eligible
Policyholders who elected to sell their Common Shares; and (c) finally
retained by the Holding Company or contributed by the Holding Company
to Canada Life to help defray the costs of conversion or to provide
additional working capital.
The Primary Offering enabled the Holding Company to ensure that a
proper market and price for the trading of Common Shares would develop
and create an active trading profile for those shares. As soon as
practicable after the IPO, the Holding Company paid cash and Canada
Life posted Policy Credits to Eligible Policyholders who were entitled
to receive Cash or Policy Credits in accordance with the Conversion
Proposal.
15. As stated in Representation 14, Eligible Policyholders residing
outside Canada who were issued Common Shares in the Conversion could
elect, prior to the demutualization, to sell all of their Common Shares
for cash to the Underwriters immediately upon issuance through the
Share Sale Service which was established by Canada Life and run
concurrently with the IPO.\10\ The Share Sale Service ended shortly
after the closing date of the demutualization and the IPO. Such
Eligible Policyholders were referred to as ``Electing Policyholders,''
and the Common Shares they elected to sell were referred to as
``Electing Shares.'' Electing Policyholders residing outside Canada had
their Electing Shares (the Resale Shares) sold for cash to the
Underwriters who, in turn, sold them to the Investors through the IPO
procedure described above. The Holding Company paid all of the
Underwriters' fees associated with the Underwriters' purchase of the
Common Shares from Eligible Policyholders through the Share Sales
Service Program or the sale of such Common Shares to the Investors in
the Primary Offering.\11\
---------------------------------------------------------------------------
\10\ Conversely, Canadian Eligible Policyholders electing to
receive cash could sell their Common Shares to the Holding Company.
\11\ Canada Life concluded that no portion of the fees it paid
to the Underwriters should be treated for Canadian tax purposes as a
dividend to policyholders who elected to sell their Common Shares in
the IPO. As a result, Canada Life did not believe there would be any
Canadian withholding tax due in connection with its payment of the
Underwriter fees. Canada Life also represented that it would not
seek reimbursement from U.S. Eligible Policyholders for any Canadian
withholding tax that ultimately might be imposed with respect to its
payment of the Underwriter fees.
---------------------------------------------------------------------------
16. As noted above, the Common Shares that were sold in the IPO
consisted of both the Resale Shares and the Primary Shares. For this
purpose, the Holding Company determined the maximum number of Common
Shares to be sold to the Underwriters and in the IPO (the IPO Shares).
In the event that the number of Electing Shares exceeded the number of
IPO shares, the shares of Electing Policyholders were to be repurchased
by the Holding Company (in the case of Canadian Electing Policyholders)
and sold to Underwriters (in the case of non-Canadian Electing
Policyholders) in ascending order, from those Common Shares held by
Electing Policyholders holding the smallest number of Common Shares to
those holding the greatest number of Common Shares until the total
number of IPO Shares is reached. Any Electing Shares not sold in
connection with the Conversion and IPO were retained by the Electing
Policyholders and confirmation of Common Share ownership was sent to
those Electing Policyholders.
17. Canada Life represents that in addition to the Share Sale
Service, it currently is offering the Assisted Sales Program to
Eligible Policyholders who received Common Shares in the
demutualization and who do not have pre-existing brokerage accounts to
which such Common Shares can be transferred. The Assisted Sales Program
commenced on December 6, 1999 for Canadian Eligible Policyholders and
was implemented in the United States on January 4, 2000 for United
States Eligible Policyholders. Canada Life anticipates that the
Assisted Sales Program will continue for up to two years from the
Effective Date although it may be discontinued at any time.
The Assisted Sales Program is designed to provide an Eligible
Policyholder, who has received Common Shares in book entry or
certificated form, an opportunity to sell such Common Shares after the
demutualization so that the policyholder will not have to find a stock
broker. Under the Assisted Sales Program, sales will take place in
Canada through Montreal Trust Company of Canada (Montreal Trust), the
Holding Company's transfer agent, and in the United States, through
EquiServe Trust Company, N.A. of Jersey City, New Jersey (Equi-Serve
Trust), an agent of Montreal Trust. Both Montreal Trust and Equi-Serve
Trust are not related to Canada Life or its affiliates.
For United States Eligible Policyholders, Equi-Serve Trust will
collect all required shareholder request forms and provide the
information to Montreal Trust on a daily basis. A bulk order will be
placed each day by a
[[Page 25961]]
Canadian broker, as per Montreal Trust's instructions, to sell the
Common Shares on The Toronto Stock Exchange. The Common Shares will be
sold at the average price paid for such shares on the date of the
sale.\12\ Although the United States Eligible Policyholder will be
required to pay a one-time administration fee of $25 to Equi-Serve
Trust, such Eligible Policyholder will not be charged any brokerage
commissions or other fees.
---------------------------------------------------------------------------
\12\ Because a United States Eligible Policyholder will receive
the average price paid for the Common Shares on the date of the
sale, Canada Life represents that the price may not correspond
exactly to the price quoted in the newspaper or elsewhere.
Therefore, within 7 business days of the receipt of an Eligible
Policyholder's properly completed documents (i.e., the sales request
form, taxpayer identification number and certification form, and the
share ownership statement or share certificate), Equi-Serve Trust
will mail the United States Eligible Policyholder a check in U.S.
dollars, made out in the names of all owners. In addition, the
Eligible Policyholder will receive a statement showing the amount of
the check, the average price paid for the Common Shares in Canadian
dollars converted to U.S. dollars, the administration charge
deducted and any applicable withholding tax. The amount of Canadian
dollars will be converted to U.S. dollars at the wholesale Interbank
rate in effect at the time of the sale.
---------------------------------------------------------------------------
18. Under the ICA, Canada Life is required to maintain two separate
accounts--a Participating Policyholder Account and a Shareholder
Account. The Participating Policyholder Account must have sufficient
capital to provide reasonable assurance that the contractual
obligations and the reasonable expectations of the Participating
Policyholders will be satisfied and to provide capital for ongoing
sales of Participating Policies. The Shareholder Account entitles
Canada Life's shareholders to receive dividends. The ICA also limits
the transfer of funds to the Shareholder Account from the Participating
Policyholder Account.
For individual Participating Policies that pay experience-based
policy dividends, Canada Life has established a Closed Block, as
defined in the Conversion Proposal, for the purpose of giving
reasonable assurances to the holders of such Participating Policies
that, after the Effective Date, assets will be available to meet
contractual obligations with respect to such Participating Policies and
to meet the reasonable expectations of the holders of such
Participating Policies regarding future dividends, as experience
justifies. The establishment of the Closed Block will not alter,
diminish, reduce or in any way modify or amend the terms or provisions
of the Participating Policies included therein.
For policyholder dividend purposes only, Canada Life is operating
the Closed Block as a closed block of participating business for the
benefit of Participating Policies included therein. A block of assets
in Canada Life's Participating Account has been allocated to the Closed
Block sub-account. Assets allocated to the Closed Block will continue
to be assets owned by Canada Life in its general account, subject to
the same liabilities (in the same priority) to which other assets in
its general account are subject.
As of the Effective Date, Canada Life cannot make any transfers
from the Closed Block, except as is necessary to pay the guaranteed
benefits and experience dividends in respect of the Participating
Policies for which the Closed Block is being maintained. Although under
certain circumstances, the Closed Block may be terminated, Canada Life
must ensure that assets that are allocated to the Closed Block be used
to provide for guaranteed benefits, policyholders' reasonable dividend
expectations, and expenses and taxes relating to Participating Policies
for which such account is being maintained.
Under the ICA, Participating Policyholders have rights upon
completion of the Conversion that are accorded to participating
policyholders of a stock life insurance company in Canada. Such rights
include the right to elect at least one-third of the directors of
Canada and the right to receive policy dividends that are declared.
18. In summary, it is represented that the transactions satisfied
or will satisfy the statutory criteria for an exemption under section
408(a) of the Act because:
(a) The Conversion Proposal was implemented pursuant to stringent
procedural and substantive safeguards imposed under Canadian and
Michigan law, will not require any ongoing supervision by the
Department.
(b) One or more independent Plan fiduciaries had an opportunity to
determine whether to vote to approve the Conversion Proposal and will
be responsible for all such decisions that were permitted under the
Conversion regarding the form of consideration to be received in return
for Ownership Rights.
(c) Eligible Policyholders that were Plans were permitted to
acquire Common Shares, Cash, or Policy Credits in exchange for, and in
extinguishment of, their Ownership Rights in Canada Life and no
Eligible Policyholder has paid or will pay any brokerage commissions or
fees to Canada Life or its affiliates in connection with the receipt of
Common Shares, the implementation of the Share Sale Service or the
Assisted Sales Program.
(d) Neither Canada Life nor its affiliates exercised discretion
with respect to voting on the Conversion Proposal or with respect to
any election to be made by any Eligible Policyholder which was a Plan,
nor did they provide ``investment advice'' as that term is defined in
29 CFR 2510.3-21(c) with respect to any election made by such Plan
policyholder.
(e) The Conversion Proposal will not change premiums or reduce
policy benefits, values, guarantees or other policy obligations of
Canada Life to its policyholders.
FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption
under section 408(a) of the Act and/or section 4975(c)(2) of the Code
does not relieve a fiduciary or other party in interest or disqualified
person from certain other provisions of the Act and/or the Code,
including any prohibited transaction provisions to which the exemption
does not apply and the general fiduciary responsibility provisions of
section 404 of the Act, which, among other things, require a fiduciary
to discharge his duties respecting the plan solely in the interest of
the participants and beneficiaries of the plan and in a prudent fashion
in accordance with section 404(a)(1)(b) of the Act; nor does it affect
the requirement of section 401(a) of the Code that the plan must
operate for the exclusive benefit of the employees of the employer
maintaining the plan and their beneficiaries;
(2) Before an exemption may be granted under section 408(a) of the
Act and/or section 4975(c)(2) of the Code, the Department must find
that the exemption is administratively feasible, in the interests of
the plan and of its participants and beneficiaries, and protective of
the rights of participants and beneficiaries of the plan;
(3) The proposed exemptions, if granted, will be supplemental to,
and not in derogation of, any other provisions of the Act and/or the
Code, including statutory or administrative exemptions and transitional
rules. Furthermore, the fact that a transaction is subject to an
administrative or statutory exemption is not dispositive of whether the
transaction is in fact a prohibited transaction; and
(4) The proposed exemptions, if granted, will be subject to the
express condition that the material facts and
[[Page 25962]]
representations contained in each application are true and complete,
and that each application accurately describes all material terms of
the transaction which is the subject of the exemption.
Signed at Washington, DC, this 1st day of May, 2000.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, Department of Labor.
[FR Doc. 00-11127 Filed 5-3-00; 8:45 am]
BILLING CODE 4510-29-P
|
