The Ontario Securities Commission (OSC) will hold a hearing next week to reconsider Burlington, Ont.-based Kingship Capital Corp.’s proposed acquisition of Mississauga, Ont.-based Pro-Financial Asset Management Inc.’s (PFAM) investment management agreements.

The OSC said today that it will hold a hearing on July 9 and 10 to consider an application from Kingship Capital and PFAM seeking a new hearing and a review of a decision by a director of the OSC’s compliance and registrant regulation branch that was made back in February, objecting to the proposed transaction. It also seeks an order approving the proposed deal.

Last year, PFAM announced that it had agreed to sell all the investment management contracts for its various index funds (the Pro-Index Funds) to Kingship Capital (KCC), which would have changed the funds’ manager from PFAM to KCC. The deal is intended to reduce PFAM’s working capital deficiency, and is subject to OSC approval.

According to an application filed by both KCC (its CEO, Kenneth White, and director, David Hopps) and PFAM (and its CEO, Stuart McKinnon) there were several errors in the director’s decision earlier this year opposing the transaction.

It says those errors include the conclusions it reached regarding: Hopps’ ability and willingness to fund KCC, which, it says, was never canvassed with him directly; whether White has the appropriate experience so that KCC can manage the Pro-Index Funds; whether KCC’s historical compliance record makes it contrary to the public interest to approve the proposed transaction; and, whether, in light of PFAM’s historical compliance record, it is contrary to the public interest to approve the transaction if McKinnon plays a significant role in KCC after the deal is consummated.

In the meantime, a temporary order, which was first imposed in May 2013, suspending PFAM’s registration as an exempt market dealer and imposing terms and conditions on its fund manager registrations, was extended to July 11, and a hearing was put off to July 9. The OSC has said that there remains an unresolved discrepancy in the records of certain principal-protected notes (PPNs) distributed by the firm.

Earlier this year, PFAM announced that the OSC had stopped the distribution of its funds. It said that it would likely request reinstatement of the ability to distribute the funds after its audited financial statements for 2013 are filed.