Exemptive Relief Applications - application for mutual fund prospectus lapse date extension.
Applicable Ontario Provisions
Securities Act, R.S.O. 1990, c. S.5, s. 62(5).
IN THE MATTER OF
THE SECURITIES ACT, R.S.O. 1990, CHAPTER S.5, AS AMENDED
IN THE MATTER OF
ALL-CANADIAN CAPITAL FUND,
COLEFORD PRIVATE BALANCED FUND
AND ALL-CANADIAN RESOURCES CORPORATION
(collectively, the "Funds")
WHEREAS the Ontario Securities Commission (the "Commission") has received an application made on behalf of the Funds for an order pursuant to subsection 62(5) of the Act that the lapse date of the current simplified prospectus of the Funds be extended to April 12, 2004;
AND UPON considering the application and the recommendation of staff of the Commission;
AND UPON All-Canadian Management Inc. (the "Manager") having represented as follows:
1. The Manager is the manager, trustee and principal distributor of the Funds.
2. All-Canadian Capital Fund ("CapitalFund") is an open-ended unincorporated mutual fund trust that was organized on October 1, 1954 under the laws of British Columbia and is presently governed by an Amended, Consolidated and Restated Trust Indenture dated November 1, 1997.
3. All-Canadian ConsumerFund ("ConsumerFund") is an open-ended unincorporated mutual fund trust that was organized on January 19, 1968 under the laws of Alberta and is presently governed by an Amended, Consolidated and Restated Trust indenture dated November 1, 1997.
4. All-Canadian Resources Corporation ("Resources Corp.") is a mutual fund corporation that was incorporated under the laws of Alberta on April 27, 1959 and continued under the laws of Canada on February 1, 1980.
5. Coleford Private Balanced Fund ("Coleford Balanced") is a class of shares of Coleford Private Funds Corporation, a mutual fund corporation that was incorporated under the Ontario Business Corporations Act on December 23, 2002.
6. Each of the Funds is a reporting issuer in all of the provinces and territories of Canada (the "Jurisdictions"), and no Fund is in default of any requirements of the securities legislation of the Jurisdictions or the rules or regulations made thereunder.
7. The units of CapitalFund and ConsumerFund, the special shares of Resources Corp. and the Series A and Series F shares of Coleford Balanced are presently offered for sale on a continuous basis in the Province of Ontario (and not in any other jurisdiction) pursuant to a simplified prospectus and annual information forms dated February 17, 2003, a receipt for which was issued by the Commission on February 26, 2003 (the "Current Prospectus").
8. Pursuant to subsection 62(1) of the Act, the lapse date for the distribution of units or special shares, as the case may be, of the Funds under the Current Prospectus is February 17, 2004 (the "Lapse Date").
9. By application dated February 12, 2004, the Funds applied for and were granted an extension of the Original Lapse Date to March 31, 2004 (the "Extended Lapse Date").
10. The Current Prospectus is required to be filed in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure ("NI 81-101"), Form N181-101F1, Form N1 81-101F2 and Companion Policy 81-101CP, which collectively governs the required disclosure provided by mutual funds under securities legislation in Canada.
11. The Manager had encountered some delays with respect to the renewal of its Current Prospectus. In particular, certain fundamental changes to the Funds were proposed, which, if approved by the security holders, would require disclosure in the Funds' pro forma prospectus. However, the special meeting of the security holders did not take place until January 30, 2004, thirteen days after the Funds were required to file its pro forma prospectus under section 62(2) of the Act. The timing of the special meeting was largely due to the Manager's involvement in the take over of the University Avenue Funds, a long and involved process of which you are aware. Rather than file a prospectus that would potentially require extensive revisions, the Manager believed that it would be preferable to wait to file the Funds' pro forma prospectus until after the special meeting of the security holders, at which time, the Manager would be in a position to provide complete and accurate disclosure with respect to fundamental changes made in respect of the Funds.
12. In addition, the Manager had been involved in ongoing negotiations with respect to the transfer of the sales function of one of the Funds to a third party, thereby causing additional delay. The Manager has now concluded its negotiations as they relate to the Funds.
13. Following the granting of the initial lapse date extension, the Manager prepared and filed a pro forma simplified prospectus and pro forma simplified annual information form (collectively the "Pro Forma Documents") and filed the same with NI 81-101.
14. After responding to comment from the Commission on the Pro Forma Documents, the Manager prepared the final form of the simplified prospectus and annual information form (the "Renewal Documents"") and contacted the auditors to provide the necessary consents to the inclusion by reference of the Funds' financial statements in the Renewal Documents.
15. The outgoing auditor, KPMG, while willing to consent to the incorporation of the December 31, 2002 in the renewal prospectus, has indicated that it is not in a position to provide a comfort letter on the June 2003 interim statements.
16. The new auditor, BDO Dunwoody, having just been appointed auditor, also indicated that it had not specifically reviewed the interim financials and could not, therefore, provide the necessary comfort letter.
17. BDO Dunwoody has been engaged in the December 31, 2003 audit of the Funds and, rather than asking them to take the time to review the June 2003 statements, the Manager felt it would be a more efficient use of time to complete the filing of the December, 2003 audited statements for incorporation into the Renewal Documents.
18. BDO Dunwoody has completed their audit of the 2003 financial statements and delivered their audit report to the Manager on Monday, March 29, 2004. We understand that 4 of the 5 directors of the Manager are prepared to approve the 2003 audited financials when presented at a meeting of the directors.
19. We are further advised that the Manager is attempting to have all directors waive notice of meeting and to convene a meeting of the directors on short notice to approve the 2003 audited financials statements. Such a meeting might occur as early as today, March 31, 2004. We understand that the Manager has also sent today, formal notice of a directors' meeting to each director. The Manager's by-laws require that a minimum notice period of 10 days for a duly constituted board meeting.
20. There have been no material changes to the affairs of the Funds since the date of the Current Prospectus.
AND UPON the undersigned being of the opinion that to do so would not be prejudicial to the public interest;
IT IS ORDERED pursuant to subsection 62(5) of the Act that the time periods provided by subsection 62(2) of the Act, as they apply to the distribution of the units or special shares, as the case may be, of the Funds under the Current Prospectus are hereby extended to the time periods that would be applicable if the Lapse Date was April 12, 2004.
March 31, 2004.