Statement of Principles on Conflicts of Interest

Desjardins Securities Inc. (“we,” “our,” “us,” or “Desjardins Securities”) is an indirectly wholly owned subsidiary of the Fédération des caisses Desjardins du Québec (the “Fédération”).

Desjardins Securities is an investment dealer registered in all provinces and territories of Canada.

Desjardins Securities carries out its securities brokerage activities under the trade names “Desjardins Wealth Management” and “Desjardins Wealth Management Securities” and “Desjardins Wealth Management Private Wealth Management,” depending on the network, and its online brokerage activities under the trade name “Desjardins Online Brokerage.” Desjardins Securities’ institutional brokerage activities are carried out under the trade name “Desjardins Capital Markets.”

It is important to Desjardins Securities that its clients be informed of existing or potential material conflicts of interest that could arise in the course of its activities, including how these material conflicts of interest are addressed in the best interest of clients.

A conflict of interest arises when the interests of different persons, e.g., a client and Desjardins Securities or one of its Advisors are incompatible or divergent.

Desjardins Securities takes reasonable measures to identify any material conflicts of interest that exist or that it can reasonably expect to arise. It determines the level of risk associated with each conflict and avoids any situation that involves a serious conflict of interest, presents too great a risk for its clients or may materially compromise market integrity. In any other material conflict of interest situation, Desjardins Securities ensures that appropriate measures are put in place to effectively control the conflict.

Generally, a conflict of interest is material if the conflict may be reasonably expected to influence either your decisions as a client in the circumstances or Desjardins Securities’ or its Advisor’ decisions in the circumstances.

Desjardins Securities, through this Statement of Principles on Conflicts of Interest (the “Statement of Principles”), informs you of the nature and scope of conflicts of interest that may have an impact on the services it offers you.

Conflict of interest situations

The main situations in which Desjardins Securities could be in a material conflict of interest, and the way in which Desjardins Securities intends to address such conflicts, are described below.

We will inform you in a timely manner should any additional material conflicts of interest be identified after account opening.

1. Related and connected issuers

As part of its business activities, Desjardins Securities may buy or sell securities of related and connected issuers on behalf of its clients, exercise its discretion to buy or sell such securities pursuant to discretionary management agreements, or make recommendations in respect of such securities.

Desjardins Securities may also, as part of its business activities, be called upon to act as an underwriter or a member of a selling group for the sale of the securities of such issuers. Its other divisions may at the same time recommend such securities.

We usually manage these conflicts of interest as follows:

• Where we advise you on the purchase or sale of securities of a related and/or connected issuer, we will notify you of our relationship with the issuer when giving you advice.
• When we exercise discretionary authority to purchase or sell securities of a related or connected issuer on your account, disclosure will be made before we exercise our discretion, either through the delivery of this Statement of Principles or its posting on our website, disclosure in the account agreement governing your account or otherwise.
• When we buy or sell securities of a related or connected issuer on your account, we will disclose our relationship to the issuer in the trade confirmation and account statement.
• When we participate as an underwriter or a member of a selling group of securities of a related or connected issuer, we will disclose our relationship to the issuer in the prospectus or other document being used to qualify these securities.
• For advisory accounts, we ensure that the suitability of the securities held in your account is reviewed when we make a recommendation.

For a description of a related and/or connected issuer and/or to view a current list of our related and connected issuers, see section Related and connected issuers disclosure below.

2. Proprietary products

As part of its business activities, Desjardins Securities may buy or sell, on behalf of its clients, products made by our affiliates (“proprietary products”), exercise its discretion to buy or sell such products pursuant to discretionary management agreements, or make recommendations in respect of such products.

These proprietary products include, but are not limited to, mutual funds and exchange-traded funds, guaranteed investment certificates, principal-protected notes and high-interest savings accounts offered by our affiliates. Offering proprietary products generally gives rise to a conflict of interest that could affect the independence of a firm or of its advisors when determining the suitability or quality of exclusive products.

We usually manage these conflicts of interest as follows:

• We implement a review process to gain an insight into the product that takes into account various factors in determining whether proprietary products should be included in the firm’s service offerings to clients.
• For advisory accounts, we ensure that the suitability of the securities held in your account is reviewed when we make a recommendation.
• We adopt compensation and incentive practices that do not encourage our Advisors to favour proprietary products over other products.
• We disclose related and connected issuer relationships to clients. See also section 1 Related and connected issuers above.

3. Relations between Desjardins Securities and other Desjardins Group entities

As part of its commercial activities, Desjardins Securities may enter into service agreements with affiliated partners who are members of the same financial group, Desjardins Group. These include the asset management service agreements that Desjardins Securities may enter into, as part of its discretionary management mandates and service offers, with Desjardins Global Asset Management Inc., Desjardins Capital Management Inc., Northwest & Ethical Investments LP, Fiera Capital Corporation, or other affiliated portfolio managers. Desjardins Securities will do so, in accordance with applicable regulations and its obligations toward its clients, by implementing a portfolio manager selection process and monitoring portfolio manager performance.

Shared premises with Desjardins Group entities

Desjardins Securities is a separate entity from the Fédération des caisses Desjardins du Québec, the Caisse Desjardins Ontario Credit Union Inc., as well as their member caisses. In some cases, the premises of these entities are located at the same address and in the same offices. Desjardins Securities Advisors perform their duties solely on behalf of Desjardins Securities. In addition, unless Desjardins Securities informs the client otherwise, the securities bought through Desjardins Securities have the following features:

a) They are not guaranteed by a government deposit insurer

b) They are not guaranteed by the caisses

c) Their value may fluctuate

4. Relationship with other issuers

As part of its business activities, Desjardins Securities may act in various capacities, often simultaneously, with respect to an issuer.

Desjardins Securities may, for a fee, act as a corporate financing advisor, an underwriter, or a member of a selling group with respect to issuers.

Desjardins Securities may express opinions or issue research reports with recommendations on issuers.

Desjardins Securities may buy or sell securities of an issuer on behalf of its clients, exercise its discretion to buy or sell such securities pursuant to discretionary management agreements, or make recommendations in respect of such securities. Such securities may on occasion be owned or traded by Desjardins Securities and its Advisors.

Desjardins Securities is called upon to act as a principal or an agent when it buys or sells for or on behalf of its clients.

Desjardins Securities may act as a market maker.

These different, and often simultaneous, roles of Desjardins Securities could have an impact on its independence regarding these issuers. Desjardins Securities has therefore put in place the following measures to effectively control the existing or potential conflicts of interest that may arise in the course of its commercial activities:

• The relationships between the different divisions of Desjardins Securities are subject to specific and effective policies and procedures, which are based on the regulations in force and prevent our retail advisory employees from having access to any non-public information that may be available to our corporate finance businesses.
• The offering documents provide full disclosure of all relationships we may have with the issuer.
• We notify you and obtain your consent before exercising our discretion on your account to invest in new or secondary issues underwritten by Desjardins Securities.
• The activities of the research division of Desjardins Securities, which expresses opinions and issues research reports with recommendations on issuers, are subject to policies on disclosure of potential conflicts of interest.
• Desjardins Securities and employee trades are identified as such and client trades are given priority over firm and employee trades in accordance with industry “client priority” regulations.
• We will tell you whether we acted as principal or agent for each transaction on the trade confirmation.

5. Compensation and incentives

Desjardins Securities and its Advisors may collect two types of compensation, direct and indirect. Direct compensation is paid by you and consists of brokerage commissions, management fees and account-related fees. Indirect compensation consists of trailing fees or other forms of compensation from third parties in connection with certain transactions involving the purchase, holding or sale of securities in your account, including units in mutual funds, shares in exchange-traded funds, bonds, principal-protected notes or newly issued securities sold by Desjardins Securities as underwriter or agent.

Ongoing trailing commissions may be paid to us by managers of investment funds for the services and advice we provide you. You are not directly charged the trailing commissions. However, these fees affect you because they reduce the fund’s return paid to you.

When Desjardins Securities acts as principal in a trade involving debt securities, it may receive an income resulting from the spread between the buying and selling prices.

In any transaction requiring currency conversion, Desjardins Securities may earn income from the conversion in addition to brokerage fees.

For more information on Desjardins Securities forms of compensation, please see the section Our Service Offerings of this document.

Desjardins Securities Advisors may also receive incentives (monetary or otherwise) for the achievement of individual or business unit objectives, with regards to business development and/or income generated.

In general, compensation and incentives may have the effect of encouraging a firm or its advisors to recommend a product or service that provides them with higher compensation.

We usually manage these conflicts of interest as follows:

• For advisory accounts, we ensure that the suitability of the securities held in your account is reviewed when we make a recommendation.
• Except for managed accounts, we inform you of all the fees payable related to a transaction before said transaction is executed.
• For fee-based advisory accounts and managed accounts, we disclose the fee rates to you in the account opening documents.
• We have implemented a comprehensive supervision program that is reasonably designed to detect, among other things, conflicts of interests between our Advisors and clients with regards to trading activities and inappropriate trading.
• You will also receive, for the period ending December 31 of each year, a report on the fees and other forms of compensation paid to Desjardins Securities for the services and advice you benefited during the year.

6. Referral arrangements

As part of its activities, Desjardins Securities may enter into referral arrangements with business partners, including with the business partners members of the same financial group, the Desjardins Group.

The terms of our referral arrangement will be set out in writing and provided to you prior to the account opening, either through the delivery of this Statement of Principles or otherwise.

Such disclosures will allow you to make an informed decision with respect to the referral and determine any potential conflicts of interest.

We undertake periodic reviews of our referral arrangements in order to ensure that the referral fees received or given do not encourage practices incompatible with our obligations toward our clients.

For further details on the Desjardins Securities referral arrangements, please see section Referral arrangements disclosure below.

7. Conflicts related to the personal interests of Desjardins Securities Advisors

Desjardins Securities Advisors may find themselves in situations where their personal interests conflict with those of one or several clients of Desjardins Securities. This could occur in the following situations in particular:

• Desjardins Securities Advisors may be offered or receive a gift or entertainment that could compromise or give the impression of compromising their independence.
• Desjardins Securities Advisors could put themselves in a conflict-of-interest situation by carrying out personal financial dealings with clients or by exercising control over clients’ financial affairs outside of their work at Desjardins Securities.
• Desjardins Securities Advisors could put themselves in a conflict-of-interest situation by participating in an outside activity that could interfere with or enter into conflict with their duties.
• Desjardins Securities Advisors could also put themselves in a situation of conflict of interest by carrying out transactions in their personal account using confidential information, about Desjardins Securities or their clients, acquired in the performance of their duties.

Under Desjardins Securities’ Code of Professional Conduct and Compliance Handbook, the interests of clients take precedence over those of Desjardins Securities and its Advisors as a matter of basic principle.

Desjardins Securities’ Code of Professional Conduct and Compliance Handbook of set forth standards that guide the conduct of its Advisors. These standards prohibit them from:

• Using personal or privileged information acquired in the course of or in connection with their duties, or exploiting a situation for the purpose of obtaining an advantage of any kind.
• Accepting or giving gifts, entertainment and compensation that could influence decisions to be made in the course of performing their duties.
• Accepting any other form of compensation than that paid by Desjardins Securities without prior approval of Desjardins Securities.
• Engaging in outside activities that could interfere or conflict with their duties at Desjardins Securities.
• Entering into financial transactions on a personal basis with clients of Desjardins Securities who are not members of their families.
• Carrying out transactions in their personal account that conflict with the interests of Desjardins Securities clients despite full knowledge of such fact.
• Engaging in any activity, holding an interest in any business or participating in any partnership that may hinder or appear to hinder their independence of judgment in the best interest of Desjardins Securities’ clients.

Desjardins Securities Advisors must disclose to the clients concerned any material conflict of interest and any personal interest in a security or other investment that can be expected to affect their capacity to advise them objectively and impartially.

Desjardins Securities Advisors must disclose to their employer any situation that can be reasonably expected to hinder the performance of their duties or their capacity to give objective and impartial advice.

The outside activities of Advisors must be approved by Desjardins Securities, which then determines the presence or absence of a conflict of interest, their potential risks, and the appropriate control measures.

We monitor and review transactions in accounts of our Advisors on a regular basis.

Desjardins Securities ensures that its practices with regards to Advisors compensation are not incompatible with its obligations toward its clients and do not encourage behaviour against clients’ interests.

Related and connected issuers disclosure

An issuer of securities is “related” to Desjardins Securities if, through the ownership of, or direction or control over, voting securities, Desjardins Securities exercises a controlling influence over that issuer, that issuer exercises a controlling influence over Desjardins Securities, or the same third party exercises a controlling influence over both Desjardins Securities and the issuer.

An issuer distributing securities is a “connected issuer” to Desjardins Securities if the relationship between this issuer and Desjardins Securities, a related issuer of Desjardins Securities or the directors, officers or partners of Desjardins Securities or a related issuer of Desjardins Securities, may lead a reasonable prospective purchaser of the securities of the connected issuer to question Desjardins Securities’ independence from the issuer with respect to the distribution of the securities of this issuer.

The entities listed below may be considered as issuers related or connected to Desjardins Securities.

Issuers

Issuer Description

Caisses Desjardins

Members of the Fédération and the Caisse Desjardins Ontario Credit Union Inc.

Capital Desjardins Inc.

Wholly owned subsidiary of the Fédération, Capital Desjardins’s purpose is to offer its own securities in the financial markets and invest the proceeds in securities issued by Desjardins caisses.

Capital régional et coopératif Desjardins inc. (“CRCD”)

Investment funds whose investment fund manager and portfolio manager is Desjardins Capital Management Inc., a wholly owned subsidiary of the Fédération. CRCD raises development capital through public offerings and allocates the funds to cooperatives and businesses. Desjardins Trust Inc. is the custodian of CRCD.

Fédération des caisses Desjardins du Québec

The Fédération is the cooperative entity responsible for strategic policy, oversight, coordination, treasury operations and development for Desjardins Group. It meets the financial needs of the caisses and other components of the Desjardins Group. In this regard, it is mandated with providing institutional funds to the Desjardins network and play the role of financial agent, in particular by providing interbank exchange services, including the financial settlement of compensation.

Fiera Capital Corporation

A public corporation in which Desjardins Financial Corporation Inc., a wholly owned subsidiary of the Fédération, holds an interest through Fiera Capital L.P. Fiera Capital Corporation is registered as a portfolio manager and investment fund manager. Fiera Capital Corporation acts as a portfolio sub-manager for certain Desjardins Funds.

Fiera Capital Mutual Funds

A family of mutual funds for which Fiera Capital Corporation is the investment fund manager and promoter. Fiera Capital Corporation is registered as a portfolio manager and can act in that capacity on behalf of Fiera Capital Mutual Funds.

Fédération des caisses Desjardins du Québec

The Fédération is the cooperative entity responsible for strategic policy, oversight, coordination, treasury operations and development for Desjardins Group. It meets the financial needs of the caisses and other components of the Desjardins Group. In this regard, it is mandated with providing institutional funds to the Desjardins network and play the role of financial agent, in particular by providing interbank exchange services, including the financial settlement of compensation.

Desjardins Trust Inc.

Indirectly wholly owned subsidiary of the Fédération, this company is a trust institution of Desjardins Group.

Desjardins Funds

A family of mutual funds for which the trustee and custodian is Desjardins Trust Inc., which is an indirectly wholly owned subsidiary of the Fédération.
Desjardins Investments Inc., a wholly owned subsidiary of Desjardins Financial Security Life Assurance Company, which itself is an indirectly wholly owned subsidiary of the Fédération, is the management company and sponsor of Desjardins Funds.
Desjardins Global Asset Management Inc. (DGAM) is their portfolio manager. DGAM is a wholly owned subsidiary of Desjardins Financial Corporation Inc., which itself is an indirectly wholly owned subsidiary of the Fédération.

DGAM Funds

A family of investment funds focused on institutional clients, for which DGAM is the investment fund manager and portfolio manager. DGAM Funds are not reporting issuers. Desjardins Trust Inc. is the trustee and custodian of DGAM Funds.

Desjardins ETFs

A family of exchange-traded funds for which Desjardins Trust Inc., an indirectly wholly owned subsidiary of the Fédération, is the trustee.
DGAM is the management company and portfolio manager of Desjardins ETFs.

NEI Funds

A family of mutual funds for which Northwest & Ethical Investments L.P. (“NEI Investments”) is the trustee and administrator. NEI Investments also acts as investment fund manager and portfolio manager for specific funds. The Fédération has a 50% interest in NEI Investments through its subsidiary Desjardins Financial Holding Inc.
Desjardins Trust Inc. is the custodian of these funds.

DIM Private Funds

A family of investment funds focused on private wealth management clients, for which DGAM is the investment fund manager and portfolio manager. DIM Private Funds are not reporting issuers. Desjardins Trust Inc. is the trustee and custodian of DIM Private Funds.

Desjardins Capital PME S.E.C.

A limited partnership for which Desjardins Capital Management Inc, a wholly owned subsidiary of the Fédération, acts as general partner and whose objective is to raise private equity in cooperatives and small and medium enterprises.

Referral arrangements disclosure

In this section, “referral agreement” refers to an agreement whereby Desjardins Securities agrees to pay or receive a referral fee from another business partner. In the course of its operations, Desjardins Securities has entered into fee-sharing agreements with the following business partners:

• Member caisses of the Fédération des caisses Desjardins du Québec
• Caisse Desjardins Ontario Credit Union Inc.
• Desjardins Financial Security Life Assurance Company (“DFS”)
• Desjardins General Insurance Inc. (“DGI”)
• Desjardins Financial Security Investments Inc. (“DFSI”)
• Desjardins Securities Financial Services Inc. (“DSFS”)
• Banque Transatlantique S.A. (“BT”)

These business partners are members of the same financial group, Desjardins Group, except for BT, which is an outside business partner.

The above-mentioned caisses offer banking services.

DFS provides life and health insurance and DGI provides casualty insurance services.

DFSI is an indirectly wholly owned subsidiary of the Fédération. In Québec, DFSI operates under the business name “SFL Investments” and is registered with the AMF, particularly, as a mutual fund dealer and a restricted dealer, and as a financial services firm for group and individual life and health insurance and financial planning.

DSFS is a wholly owned subsidiary of Desjardins Independent Network Insurance Inc. DSFS is registered with the AMF as a financial services firm for group and individual life and health insurance and financial planning.

BT is a wholly owned subsidiary of Groupe Crédit Mutuel CIC, which provides banking services primarily in the following sectors: private banking, international mobility assistance, employee stock ownership plan administration services and advisory. Depending on the client referral arrangements between Desjardins Securities and the above-mentioned entities, Caisse and BT staff may refer clients to Desjardins Securities, which will be able to provide them with any private wealth management services they offer.

Desjardins Securities Advisors are authorized to refer clients to DFS and DGI for insurance products and to BT for banking services outside Canada.

1. Client referrals to Desjardins Securities by member caisses of the Fédération des caisses Desjardins du Québec and by the Caisse Desjardins Ontario Credit Union Inc.

As consideration for client referrals to Desjardins Securities’ networks Securities Brokerage, Signature Service and Private Wealth Management, the member caisses receive compensation equal to 15% of the gross commission and fee income generated annually by all the referred clients who are members.

2. Client referrals to DFS from Desjardins Securities

The table above shows the compensation offered for the best-selling insurance products and is not comprehensive. Other forms of compensation that may apply to other ancillary products and services offered by DFS, such as group insurance, life insurance for people over 50, travel insurance, accident insurance or GetWell insurance, guaranteed investment funds contracts, personal annuities (life annuity or annuity certain), individual retirement plans, group plans (group RRSPs, defined-contribution pension plans, deferred profit sharing plans, etc.), collective annuities, and others.

3. Client referrals to DGI from Desjardins Securities

As consideration for client referrals to DGI, Desjardins Securities receives compensation equal to 15% of the insurance premium in the case of individuals (1.5% for renewals) and 15% of the insurance premium, up to a maximum of $2,000 in the case of businesses (1.5% for renewals).

4. Client referrals to Desjardins Securities by DFSI

a) As consideration for client referrals to Desjardins Securities, DFSI receives a 20% referral fee based on the revenues generated by the referred client in the 5 years following the date when the referred client opened a new account. After 5 years, no commission is due.

b) As consideration for client referrals to Desjardins Online Brokerage, brokerage platform Disnat Classic, DFSI receives, as intermediary, compensation based on the gross commissions generated on each transaction, including those from bank transfers and other brokers, according to the percentages in the table below

c) As consideration for client referrals to Desjardins Online Brokerage, for the brokerage platform Disnat Direct, DFSI receives, as intermediary, compensation based on the gross commissions generated on each transaction according to the percentages in the table below.

5. Client referrals to DSFS from Desjardins Securities

As consideration for client referrals to DSFS, Desjardins Securities receives, in the year following the signing of a new contract, as intermediary, a commission corresponding to 30% of DSFS’s compensation. No other commission is paid under the agreement, even at policy renewal.

6. Client referrals to Desjardins Securities by BT

a) Securities Brokerage network:

As consideration for the referral of clients who engaged the services of Desjardins Securities for opening an account, BT receives, as referral fee, the following fees (in percentage):

• 20% of the gross commissions generated by the account;
• 20% of the gross fees generated by the account.

b) Private Wealth Management network:

As consideration for the referral of clients who engaged the services of Desjardins Securities for the discretionary management of their portfolio, BT receives, as referral fee, the following fees (in percentage):

• 50% of the gross fees generated by the client referred by BT or Crédit Mutuel-CIC;
• 30% of the gross fees generated by the client referred by a Caisse Desjardins or any other Desjardins Group entity.

Fees will be paid to BT annually by Desjardins Securities and calculated from January 1 to December 31 of each year.

Other referral arrangements

Desjardins Securities may enter into arrangements whereby it pays or receives compensation for client referrals. The following information is communicated to the client in writing before the opening of the account or the provision of services by the Advisor:

• The name of each party to the referral arrangement
• The purpose and material terms of the referral arrangement, including the nature of the services to be provided by each party
• Any conflicts of interest resulting from the relationship between the parties to the referral arrangement and from any other element of the referral arrangement
• The method for calculating the referral fee and, to the extent possible, the amount of the fee
• The category of registration of each registrant that is a party to the agreement, with a description of the activities that the registrant is authorized to engage in under that category and, considering the nature of the referral, the activities that the registrant is not allowed to engage in
• If a referral is made to a registrant, a statement that all activity requiring registration resulting from the referral arrangement will be provided by the registrant receiving the referral
• Any other information that a reasonable client would consider important in evaluating the referral arrangement

If there is a change to the information set out above, Desjardins Securities must ensure that written disclosure of that change is provided to each client affected by the change as soon as possible and no later than the thirtieth day before the date on which a referral fee is next paid or received.

Review

We will notify you of any significant changes to this Statement of Principals. An updated version of the Statement of Principals is available on our website at: www.vmdconseil.ca/en/statement-principles-conflicts-interest.