Mutual Reliance Review System for Exemptive Relief Application -- Exemptive relief granted to scholarship plan allowing extension of prospectus lapse date and relief to not include interim financial statements in the renewal prospectus due to the unique fact situation that gave rise to the application.
Applicable Statutory Provisions
Securities Act, R.S.O 1990, c.,S.5, as am., s. 62(5).
OSC Rule 41-502, ss. 5.2(b), 11.1.
July 10, 2007
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, SASKATCHEWN,
MANITOBA, ONTARIO, QUEBEC, NOVA SCOTIA,
PRINCE EDWARD ISLAND, NEW BRUNSWICK,
NEWFOUNDLAND AND LABRADOR, THE YUKON
AND NUNAVUT TERRITORIES
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS ("MRRS")
IN THE MATTER OF
THE CHILDREN'S EDUCATIONAL FOUNDATION OF
CANADA (THE "FILER") ON BEHALF OF THE CHILDREN'S
EDUCATION TRUST OF CANADA ("CETC")
MRRS DECISION DOCUMENT
The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") that:
(i) the time limits for the renewal of the long form prospectus of the Filer dated June 30, 2006 (the "Current Prospectus") be extended to the time limits that would be applicable if the lapse date of the Current Prospectus was August 31, 2007 (the "New Lapse Date"); and
(ii) the renewal prospectus for CETC filed within the extended time limits applicable under the New Lapse Date not be required to include the interim financial statements of the Filer for the period ended June 30, 2007 (the "Interim Statements").
Paragraphs (i) and (ii) together shall be referred to as the Requested Relief.
Under the MRRS,
(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 the Filer:
1. The Filer was incorporated under the laws of Canada by articles of incorporation dated March 23, 1990.
2. The Filer is a reporting issuer in each of the provinces and territories in Canada and is not in default of any of the requirements of the securities legislation applicable therein.
Lapse Date Relief
3. The Filer filed the Current Prospectus in connection with the continuous distribution of securities of CETC.
4. The lapse date for the Current Prospectus is June 30, 2007 (the "Lapse Date").
5. The Filer filed a pro forma prospectus on May 31, 2007 (the "Pro Forma Prospectus") in connection with the continuous public offering of the securities of CETC to the public beyond the Lapse Date.
6. Pursuant to the Legislation, a final prospectus (the "Prospectus") must be filed by July 10, 2007 (the "Filing Date"), and an MRRS decision document evidencing receipt obtained by July 20, 2007.
7. In connection with the review of the Pro Forma Prospectus, Staff of the OSC ("Staff") have to date issued one comment letter dated June 13, 2007, to which the Filer responded on June 27, 2007.
8. In a letter dated June 19, 2007 (the "Second Letter"), Staff have indicated that further comments related to broad industry wide issues are likely to be forthcoming and that, in light of timing concerns, an extension of the Lapse Date would be appropriate.
9. In the Second Letter, Staff have advised that an extension of the Lapse Date would provide additional time in order to resolve the outstanding issues while ensuring that the continuous public offering remains in distribution.
10. If the relief requested is not granted, the Filer will no longer be qualified to distribute securities in the Jurisdictions pursuant to the Current Prospectus after June 30, 2007.
Prospectus Relief -- Interim Financial Statements
11. Pursuant to section 2.4 of National Instrument 81-106 -- Investment Fund Continuous Disclosure, the Foundation is required to file the Interim Statements on or before August 29, 2007. If the Interim Statements are filed before the Prospectus is filed, the Interim Statements will be required to be included in the Prospectus.
12. In contrast, the Interim Statements would not be required to be included in the Prospectus if the Prospectus were filed by the Filing Date.
13. In addition, in the Second Letter, Staff have advised that they would be willing to recommend that the application fee in Ontario for an extension of the Lapse Date be waived.
Each of the Decision Makers is satisfied that the tests contained in the Legislation that provide the Decision Maker with the jurisdiction to make the decision have been met.
The decision of the Decision Makers under the Legislation is that:
A. the time periods provided by the Legislation as they apply to a distribution of securities under the Current Prospectus are hereby extended to the time periods that would be applicable if the lapse date of the Current Prospectus was August 31, 2007; and
B. the Filer is exempt from the requirements in the Legislation to include the Interim Statements in the Prospectus, filed within the time limits permitted by this Decision under the New Lapse Date, in the event the Interim Statements are filed in advance of the date on which the Prospectus is filed.