National Policy 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the requirement in s.3.2(2), NI 81-101 to deliver a fund facts document to investors for subsequent purchases of mutual fund securities made pursuant to pre-authorized investment plans, subject to certain conditions.
Applicable Legislative Provisions
National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 3.2(2) and 6.1.
September 9, 2014
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF PFSL FUND MANAGEMENT LTD. (the Filer) AND IN THE MATTER OF PFSL INVESTMENTS CANADA LTD. (the Representative Dealer)
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of each Existing Fund (as defined below) and all future mutual funds that will be managed from time to time by the Filer or by an affiliate or successor of the Filer (each, a Future Fund and, together with each Existing Fund, each, a Fund and, collectively, the Funds) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the requirement in the Legislation to send or deliver the most recently filed fund facts document (Fund Facts) at the same time and in the same manner as otherwise required for the prospectus (the Fund Facts Delivery Requirement), not apply in respect of purchases of securities of the Funds pursuant to a pre-authorized investment plan, including employee purchase plans, capital accumulation plans, or any other contracts or arrangements for the purchase of a specified amount on a dollar or percentage basis of securities of the Funds on a regularly scheduled basis (each an Investment Plan) (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut (together with Ontario, the 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. The capitalized term used in this decision has the following meaning:
Existing Fund means any of Primerica Aggressive Growth Fund, Primerica Growth Fund, Primerica Moderate Growth Fund, Primerica Conservative Growth Fund, Primerica Income Fund and Primerica Canadian Money Market Fund.
This decision is based on the following facts represented by the Filer:
1. The head office of the Filer is located in Ontario.
2. The Funds are, or will be, reporting issuers in one or more of the Jurisdictions. Securities of the Funds are, or will be, qualified for sale on a continuous basis pursuant to a simplified prospectus.
3. Neither the Filer nor the Funds are in default of any of the requirements of securities legislation in any Jurisdiction.
4. Securities of the Funds are, or will be, distributed exclusively through the Representative Dealer.
5. The Representative Dealer is registered as a dealer in one or more of the Jurisdictions.
6. Each of the investors may be offered the opportunity to invest in a Fund on a regular or periodic basis pursuant to an Investment Plan.
7. Under the terms of an Investment Plan, an investor instructs the Representative Dealer to accept additional contributions on a pre-determined frequency and/or periodic basis and to apply such contributions on each scheduled investment date to additional investments in specified Funds. The investor authorizes the Representative Dealer to debit a specified account or otherwise makes funds available in the amount of the additional contributions. An investor may terminate the instructions, or give amended instructions, at any time.
8. Currently, an investor who wishes to establish an Investment Plan (a Participant) will receive a copy of the latest Fund Facts relating to the relevant securities of the Fund at the time an Investment Plan is established.
9. An agreement of purchase and sale of mutual fund securities is not binding on the purchaser if the Representative Dealer receives notice of the intention of the purchaser not to be bound by the agreement of purchase and sale within a specified time period.
10. The terms of an Investment Plan are such that a Participant can terminate the instructions to the Representative Dealer 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.
11. Pursuant to the Fund Facts Delivery Requirement, the Representative Dealer who receives an order or subscription for a security of a Fund offered in a distribution to which the Legislation applies, must, unless it has previously done so, send to the purchaser the latest Fund Facts 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.
12. Currently, the Fund Facts Delivery Requirement obligates the Representative Dealer (not acting as agent for the applicable investor) to send or deliver to all Participants who purchase securities of the Funds pursuant to an Investment Plan, the latest Fund Facts of the applicable Funds at the time the investor enters into the Investment Plan and thereafter, any subsequent Fund Facts (a Renewal Fund Facts).
13. The proposed amendments to NI 81-101 and consequential amendments as described in Stage 3 of the Point of Sale Disclosure for Mutual Funds -- Point of Sale Delivery of Fund Facts, and published for comment on March 26, 2014, contemplate an exception from the Fund Facts Delivery Requirement for Investment Plans (Proposed Exception).
14. Until the Canadian Securities Administrators publish final amendments to implement the Proposed Exception, the Filer would like the Fund Facts Delivery Requirement not to apply in respect of purchases of securities of the Funds pursuant to an Investment Plan.
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 provided that:
1. Investors who become Participants and invest in any Funds will be sent or delivered the most recently filed Fund Facts and a one-time notice advising the Participants:
(a) that they will not receive the Fund Facts when they subsequently purchase securities of the applicable Fund under the Investment Plan unless they request the Fund Facts at the time they initially invest in an Investment Plan or subsequently request the Fund Facts by calling a specified toll-free number or by sending a request via mail or e-mail to a specified address or email address;
(b) that the most recently filed Fund Facts will be sent or delivered to any Participant that requests it at no cost to the Participant;
(c) that the most recently filed Fund Facts may be found either on the SEDAR website or on the Filer's website;
(d) that they will not have the right to withdraw from an agreement of purchase and sale in respect of a purchase of securities of any Funds made pursuant to an Investment Plan, other than in respect of the initial purchase and sale, but they will have the right of action for damages or rescission in the event any Fund Facts or document incorporated by reference into any Renewal Fund Facts contains a misrepresentation (a Misrepresentation Right), whether or not they request the Fund Facts; and
(e) that they have the right to terminate an Investment Plan at any time before a scheduled investment date.
2. Following 1 above, Participants will be advised annually in writing as to how they can request the Fund Facts and that they have a Misrepresentation Right.
The decision, as it relates to a Jurisdiction, will terminate on the effective date following any applicable transition period for any legislation or rule dealing with the Proposed Exception.