National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief granted to commodity pools for extension of the lapse dates of their prospectus – Filer will file simplified prospectus, annual information form and fund facts documents instead of a long form prospectus due to alternative fund amendments – Extensions of lapse date will not affect the currency or accuracy of the information contained in the current prospectuses.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).
January 14, 2019
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
BMO NESBITT BURNS INC.
BMO FINTECH SECTOR TACTIC™ FUND,
BMO CANADIAN TOP 15 SMALL CAP TACTIC™ FUND AND
BMO U.S. TOP 15 SMALL CAP TACTIC™ FUND
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Funds for a decision under the securities legislation of the Jurisdiction (the Legislation) that the time limit for the renewal of the long form prospectus of the Funds dated January 17, 2018, as amended and restated on February 1, 2018 (the Prospectus) be extended to those time limits that would apply if the lapse date of the Prospectus was February 28, 2019 (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(i) the Ontario Securities Commission is the principal regulator for this application; and
(ii) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the Canadian Jurisdictions).
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation incorporated under the laws of Ontario. The Filer’s head office is located in Toronto, Ontario.
2. The Filer is registered as an investment fund manager under the securities legislation of each of Ontario, Québec and Newfoundland and Labrador.
3. The Filer is the investment fund manager of the Funds.
4. Each of the Funds is an alternative mutual fund established under the laws of Ontario, and is a reporting issuer as defined in the securities legislation of each of the Canadian Jurisdictions.
5. Neither the Filer nor any of the Funds are in default of securities legislation in any of the Canadian Jurisdictions.
6. The Funds currently distribute securities in the Canadian Jurisdictions under the Prospectus.
7. Pursuant to subsection 62(1) of the Securities Act (Ontario) (the Act), the lapse date of the Prospectus is January 17, 2019 (the Lapse Date). Accordingly, under subsection 62(2) of the Act, the distribution of securities of each of the Funds would have to cease on the Lapse Date unless: (i) the Funds file a pro forma prospectus at least 30 days prior to the Lapse Date; (ii) the final prospectus is filed no later than 10 days after the Lapse Date; and (iii) a receipt for the final prospectus is obtained within 20 days of the Lapse Date.
8. At the time the Prospectus was filed, the Funds were considered “commodity pools” pursuant to National Instrument 81-104 Commodity Pools. Pursuant to amendments to National Instrument 81-102 Investment Funds (NI 81-102) which took effect on January 3, 2019, the Funds are now considered “alternative mutual funds”.
9. The process required to comply with the amendments to NI 81-102 for unlisted alternative mutual funds requires the Filer to offer securities of the Funds under a simplified prospectus, annual information form and fund facts documents format, instead of the current long form prospectus format, as required by National Instrument 41-101 General Prospectus Requirements (NI 41-101). The new form of offering documents will require ongoing review by the Filer, and given the time required to perform these tasks accurately, the Filer would benefit from additional time to finalize the simplified prospectus, annual information form and fund facts documents beyond the Lapse Date.
10. The Filer requests an extension of the Lapse Date of the Prospectus to February 28, 2019 in order for the Filer to ensure an orderly transition from the long form prospectus format, as required under NI 41-101, to a simplified prospectus, annual information form and fund facts documents format, as required by the amendments to NI 81-102.
11. It would be more efficient and cost effective for unitholders to extend the Lapse Date of the Prospectus to February 28, 2019, and allowing the Filer to file a simplified prospectus, annual information form and fund facts as required by the amendments to NI 81-102 prior to that date, as opposed to having the Filer file a pro forma long form prospectus prior to the original lapse date of January 17, 2019 and a subsequent simplified prospectus, annual information form and fund facts documents prior to July 2019.
12. There have been no material changes in the affairs of the Funds since the date of the Prospectus. Accordingly, the Prospectus of the Funds represents current information regarding the Funds.
13. Given the disclosure obligations of the Funds, should a material change in the affairs of any of the Funds occur, the Prospectus will be amended as required under the Legislation.
14. New investors in the Funds will receive delivery of the Prospectus.
15. The Exemption Sought will not affect the accuracy of the information contained in the Prospectus and will therefore not be prejudicial to the public interest.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.
Investment Funds and Structured Products
Ontario Securities Commission