Exemption from the requirement to deliver a renewal prospectus annually to mutual fund investors purchasing units pursuant to pre-authorized investment plans, subject to certain conditions.
Securities Act, R.S.O. 1990, c. S.5., as am., ss. 71, 147.
March 14, 2007
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
NEXGEN FINANCIAL LIMITED PARTNERSHIP
THE NEXGEN FUNDS LISTED IN APPENDIX A
(the Existing Funds)
MRRS DECISION DOCUMENT
The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from NexGen in respect of the Funds (as defined below) for a decision under the securities legislation of the Jurisdictions (the Legislation) that exempts Nexgen and the Distributors (as defined below) from the requirements of the Legislation to deliver a renewal prospectus together with any amendment (the Delivery Requirement) in connection with subsequent purchases of the Funds under a pre-authorized investment plan (an Investment Plan) (the Requested Relief).
Under the Mutual Reliance Review System for Exemptive Relief Applications:
a. the Ontario Securities Commission is the principal regulator for this application, and
b. this MRRS decision document evidences the decision of each Decision Maker.
Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.
This decision is based on the following facts represented by NexGen:
1. NexGen is a limited partnership formed under the laws of the Province of Ontario having its head office in Toronto, Ontario. NexGen is registered as an adviser in the categories of investment counsel and portfolio manager and as a dealer in the categories of mutual fund dealer and limited market dealer.
2. NexGen is the manager, trustee and the principal distributor of the Existing Funds, a group of 26 open-end mutual funds established under the laws of Ontario. The securities of the Existing Funds are distributed under a simplified prospectus and annual information form dated May 5, 2006. The securities of all additional NexGen open-end mutual funds established from time to time (the Future Funds) (the Existing Funds and the Future Funds collectively referred to as the Funds) will also be distributed under a simplified prospectus and annual information form.
3. The securities of the Funds are or will also be distributed through independent third party brokers and dealers (the Distributors). NexGen may offer investors the opportunity to invest in the Funds on a regular or periodic basis pursuant to an Investment Plan that includes employee purchase plans, capital accumulation plans, or any other contract or arrangement for the purchase of a specified amount of securities on a regular scheduled basis.
4. Under the terms of an Investment Plan, an investor instructs a Distributor to accept additional contributions of a pre-determined frequency and/or periodic basis and to apply such contributions on each scheduled investment date to additional investments in specified Funds. An investor may amend their instructions from time to time. An investor who establishes an Investment Plan will receive a copy of the current simplified prospectus relating to the applicable Fund at the time the Investment Plan for that Fund is established.
5. Under the Legislation, a Distributor not acting as agent of the purchaser, who receives an order or subscription for a security of a Fund offered in a distribution to which the Delivery Requirement applies, must, unless it has previously done so, send by prepaid mail or deliver to the purchaser the latest prospectus and any amendment to the prospectus filed either before entering into an agreement of purchase and sale resulting from the order or subscription or not later than midnight on the second day, exclusive of Saturdays, Sundays and holidays, after entering into such agreement.
6. Under the Legislation, an agreement referred to in paragraph 5 is not binding on the purchaser if the Distributor receives notice of the intention of the purchaser not to be bound by the agreement of purchase and sale within a specified time period.
7. The terms of an Investment Plan are such that an investor can terminate the instructions to the Distributor at any time. Therefore, there is no agreement of purchase and sale until a scheduled investment date arrives and the instructions have not been terminated. At this point the securities are purchased.
8. A Distributor not acting as an agent for the applicable investor is required pursuant to the Legislation to mail or deliver to all investors who purchase securities of Funds pursuant to an Investment Plan (the Participants), the current simplified prospectus of the applicable Funds at the time the investor enters into the Investment Plan and thereafter, any renewal prospectus or amendment thereto filed under the Legislation. Generally, this results in Participants receiving a renewal prospectus once a year in connection with subsequent purchases after making their initial purchase under an Investment Plan.
9. Participants will be advised either through the simplified prospectus of the applicable Fund or in the documents they receive in respect of their participation in the Investment Plan of the terms of this decision. Participants will be advised that they will not receive a renewal prospectus unless they request it at the time they decide to enroll in the Investment Plan or subsequently request it from the applicable dealer or broker. Participants will be advised that they can find a renewal prospectus and any amendments thereto either on the SEDAR website or on the Funds' website. Participants will be advised that they will not have a right of withdrawal in respect of purchases made under an Investment Plan, other than in respect of the initial purchase, but they will have a right of action for damages or rescission in the event that the renewal prospectus contains a misrepresentation (the Misrepresentation Right), whether or not they request the renewal prospectus. Participants will also be advised that they have the right to terminate the Investment Plan at any time before a scheduled investment date.
10. Participants will also be advised annually in writing (in an account statement sent by a dealer or broker or otherwise) how they can request the current renewal prospectus and any amendments thereto and that they have a Misrepresentation Right.
Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met.
The Decision of the Decision Makers under the Legislation is that the Requested Relief is granted so long as:
(i) Participants are advised, in the simplified prospectus of the applicable Fund or in the documents they receive in respect of their participation in the Investment Plan, of the information described in paragraph 9 above.
(ii) A Participant can terminate participation in the Investment Plan at any time.
(iii) Participants are advised annually in writing (in an account statement sent by the applicable dealers or otherwise) how they can request the current renewal prospectus and any amendments thereto and that they have a Misrepresentation Right.
(iv) The Misrepresentation Right in the Legislation of a Jurisdiction is maintained in respect of a Participant whether or not a renewal prospectus is requested or received.
"Carol S. Perry"
"Kevin J. Kelly"
NEXGEN CANADIAN CASH REGISTERED FUND
NEXGEN CANADIAN BOND REGISTERED FUND
NEXGEN CANADIAN GROWTH AND INCOME REGISTERED FUND
NEXGEN CANADIAN BALANCED GROWTH REGISTERED FUND
NEXGEN CANADIAN DIVIDEND AND INCOME REGISTERED FUND
NEXGEN CANADIAN LARGE CAP REGISTERED FUND
NEXGEN CANADIAN GROWTH REGISTERED FUND
NEXGEN NORTH AMERICAN DIVIDEND AND INCOME REGISTERED FUND
NEXGEN NORTH AMERICAN LARGE CAP REGISTERED FUND
NEXGEN NORTH AMERICAN VALUE REGISTERED FUND
NEXGEN AMERICAN GROWTH REGISTERED FUND
NEXGEN NORTH AMERICAN SMALL / MID CAP REGISTERED FUND
NEXGEN AMERICAN GROWTH REGISTERED FUND
NEXGEN CANADIAN CASH TAX MANAGED FUND
NEXGEN CANADIAN BOND TAX MANAGED FUND
NEXGEN CANADIAN GROWTH AND INCOME TAX MANAGED FUND
NEXGEN CANADIAN BALANCED GROWTH TAX MANAGED FUND
NEXGEN CANADIAN DIVIDEND AND INCOME TAX MANAGED FUND
NEXGEN CANADIAN LARGE CAP TAX MANAGED FUND
NEXGEN CANADIAN GROWTH TAX MANAGED FUND
NEXGEN NORTH AMERICAN DIVIDEND AND INCOME TAX MANAGED FUND
NEXGEN NORTH AMERICAN LARGE CAP TAX MANAGED FUND
NEXGEN NORTH AMERICAN VALUE TAX MANAGED FUND
NEXGEN NORTH AMERICAN GROWTH TAX MANAGED FUND
NEXGEN NORTH AMERICAN SMALL / MID CAP TAX MANAGED FUND
NEXGEN AMERICAN GROWTH TAX MANAGED FUND