Exemption from the requirement to deliver comparative annual financial statements to registered securityholders of certain mutual funds.
Securities Act (Ontario), R.S.O. 1990 c. S.5, as am., ss. 79 and 80(b)(iii).
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA, ONTARIO AND NOVA SCOTIA
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
THE FUNDS LISTED IN SCHEDULE "A"
MRRS DECISION DOCUMENT
WHEREAS the Canadian securities regulatory authority or regulator (the "Decision Maker") in each of the Provinces of Alberta, Ontario and Nova Scotia (the "Jurisdictions") has received an application (the "Application") from AIC Limited (the "Manager") and the Funds for a decision pursuant to the securities legislation of the Jurisdictions (the "Legislation") for relief from the requirement to deliver comparative annual financial statements of the Funds to those securityholders of the Funds requesting not to receive them;
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS, unless otherwise defined, the terms herein have the meaning set out in National Instrument 14-101 Definitions;
AND WHEREAS it has been represented by the Manager to the Decision Makers that:
(a) The Funds are either open-ended mutual fund trusts or separate classes of a mutual fund corporation governed by the laws of Ontario.
(b) The Manager acts as manager of the Funds set out in Schedule "A" and, in the case of its Funds which are trusts, it is the trustee of such Funds.
(c) The Funds are reporting issuers in each of the Jurisdictions.
(d) Securities of the Funds are presently offered for sale on a continuous basis in each of the provinces and territories of Canada pursuant to a simplified prospectus.
(e) Each of the Funds is required to deliver annually, within 140 days of its financial year-end, to each holder of its securities ("Securityholders"), comparative financial statements in the prescribed form pursuant to the Legislation. The Funds' financial year-end is December 31.
(f) The Manager will send to Securityholders who hold securities of the Funds in client name (whether or not the Manager is the dealer) (the "Direct Securityholders") in each year, a notice advising them that they will not receive the annual financial statements of the Funds for the year then ended if they request not to receive same, and providing them with a request form to send back, by fax or prepaid mail, if they do not wish to receive the annual financial statements. The notice will advise the Direct Securityholders where the annual financial statements can be found on the websites listed in Schedule "A" (including on the SEDAR website) and downloaded. The Manager would not send such annual financial statements to any Direct Securityholder who requests not to receive them in response to such notice unless such Direct Securityholder subsequently requests them.
(g) Securityholders who hold their securities in the Funds through a nominee will be dealt with pursuant to National Instrument 54-101.
(h) Securityholders will be able to access annual financial statements of the Funds either on the SEDAR website or on the Manager's website or by calling the Manager's toll-free phone line listed in Schedule "A". Top ten holdings, which are updated on a periodic basis, will also be accessible to Securityholders on the Manager's website or by calling the Manager's toll-free line.
(i) There would be substantial cost savings if the Funds are not required to print and mail annual financial statements to those Direct Securityholders who do not want them.
(j) The Canadian Securities Administrators ("CSA") have published for comment proposed National Instrument 81-106 ("NI 81-106") which, among other things, would permit a Fund not to deliver annual financial statements to those of its Securityholders who do not request them, if the Funds provide each Securityholder with a request form under which the Securityholder may request, at no cost to the Securityholder, to receive the mutual fund's annual financial statements for that financial year.
(k) NI 81-106 would also require a Fund to have a toll-free telephone number for or accept collect calls from persons or companies that want to receive a copy of, among other things, the annual financial statements of the Fund.
AND WHEREAS pursuant to the System this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers are satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;
AND WHEREAS the Decision Makers are satisfied that making the Decision will not adversely affect the rule-making process with respect to proposed National Instrument 81-106 and is consistent with National Instrument 54-101;
THE DECISION of the Decision Makers pursuant to the Legislation is that is that until NI 81-106 comes into force, the Funds shall not be required to deliver their comparative annual financial statements to their Direct Securityholders who have requested not to receive them provided that:
(a) the Manager shall file on SEDAR, under the annual financial statements category, confirmation of mailing of the request forms that have been sent to the Direct Securityholders as described in clause (f) of the representations within 90 days of mailing the request forms;
(b) the Manager shall file on SEDAR, under the annual financial statements category, information regarding the number and percentage of requests to not receive annual financial statements made by the return of the request forms, on a province-by-province basis within 30 days after the end of each quarterly period beginning from the date of mailing the request forms and ending 12 months from the date of mailing;
(c) the Manager shall record the number and summary of complaints received from Direct Securityholders about not receiving the annual financial statements and shall file on SEDAR, under the annual financial statements category, this information within 30 days after the end of each quarterly period beginning from the date of mailing the request forms and ending 12 months from the date of mailing;
(d) the Manager shall, if possible, measure the number of "hits" on the annual financial statements of the Funds on the Manager's website and shall file on SEDAR, under the annual financial statements category, this information within 30 days after the end of each quarterly period beginning from the date of mailing the request forms and ending 12 months from the date of mailing; and
(e) the Manager shall file on SEDAR, under the annual financial statements category, estimates of the cost savings resulting from the granting of this Decision within 90 days of mailing the request forms.
(f) this decision shall terminate upon NI 81-106 coming into force.
March 23, 2004.
"Paul M. Moore"
"Wendell S. Wigle"
SCHEDULE "A" to MRRS DECISION DOCUMENT
LIST of FUNDS
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