Proxy Voting Guidelines
GCIC Ltd. ("GCIC"), in its capacity as manager, provides investment management and administrative services to, the Diversified Portfolios, the Dynamic Funds, the Marquis Pools, the Marquis MultiPartners Portfolios, the Radiant Strategic Portfolios, the Viscount Pools, the diversiGlobal, diversiTrust and diversiYield closed-end funds, and the Canada Dominion and CMP Resource Limited Partnerships (each a "Fund", collectively the "Funds"). GCIC also provides investment management and administrative services to, among others, hedge funds, pooled funds, a labour-sponsored fund and institutional clients.
GCIC is a subsidiary of Dundee Wealth Management Inc. ("Dundee Wealth"). Dundee Wealth is a financial services company which provides a broad range of financial products and services to individuals, institutions and corporations through a number of operating subsidiaries including GCIC, Dundee Private Investors Inc. ("Dundee Private"), Dundee Securities Corporation ("Dundee Securities") and Dundee Wealth Bank ("Dundee Bank"). Dundee Private is a financial planning firm and mutual fund dealer. Dundee Securities is an investment dealer and broker and a member of the Toronto Stock Exchange, the Montreal Exchange, the TSX Venture Exchange, and of the Investment Dealers Association of Canada. Dundee Bank is a Schedule I bank and a member of the Canada Deposit Insurance Corporation. Dundee Wealth is a subsidiary of Dundee Corporation which, in addition to its ownership in Dundee Wealth, holds other investments for its own account, which investments may change from time to time.
Subject to compliance with applicable securities legislation, GCIC, 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, GCIC 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 GCIC'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.
GCIC'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 GCIC, 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 GCIC's Portfolio Administrator of Proxy Voting (the "Portfolio Administrator") for filing and record-keeping.
In addition, GCIC 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, GCIC, on behalf of a Fund, will not vote any of the securities a Fund holds in underlying mutual funds managed by GCIC or any of its affiliates or associates (as such terms are defined in the Securities Act (Ontario)). However, GCIC, 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 GCIC has voting responsibility on behalf of a Fund. The Manager of Portfolio Administration, in consultation with the Executive Vice-President, Counselling, GCIC Investment Counsel, develops and updates a list of matters GCIC 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 GCIC's established instructions.
Generally, all proxy voting is done by the Portfolio Administrator, on behalf of GCIC, 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 GCIC, a portfolio advisor or sub-advisor may instead submit to GCIC in paper format a Fund's proxy voting information for GCIC 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 Dundee Wealth or other related entities. There is the potential for a conflict of interest between the interests of the Funds and the interests of GCIC or its employees in connection with the exercise of voting rights of the Funds attached to the shares of Dundee Wealth 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 Dundee Wealth 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, GCIC 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 Dundee Wealth or another related entity and without taking into account any consideration relevant to Dundee Wealth 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 Board of Governors, all of whom are independent of GCIC, for its consideration and advice, although the responsibility for deciding how to vote a Fund's proxies and for exercising the vote remains with GCIC. The primary responsibility of the Board of Governors is to represent the interests of investors in the Funds managed by GCIC and for this purpose to act in an advisory capacity to GCIC.
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 Goodman & Company's website (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, GCIC Ltd., One Dundee Place, 1 Adelaide Street East, Toronto, Ontario, M5C 2V9.