Purpose Investments Inc.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted to non-redeemable investment fund from take-over bid requirements for normal course purchases of units of any class of securities of the fund on the Toronto Stock Exchange or other secondary market.

Applicable Legislative Provisions

Securities Act (Ontario), R.S.O. 1990, c. S.5, as am., ss. 89-100, 104(2)(c).

June 5, 2015

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 PURPOSE INVESTMENTS INC. (the Filer)

DECISION

Background

The principal regulator has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting a purchaser of securities of Limited Duration Investment Grade Preferred Securities Fund (the Fund) from the Take-over Bid Requirements (as defined below) as it relates to an offer to acquire securities of Class A Units, Class F Units, Class U Units or Class V Units of the Fund, as applicable (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 Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut (together with the Jurisdiction, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 -- Definitions (NI 14-101) and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Take-over Bid Requirements means the requirements of the Legislation relating to take-over bids including the requirement to file a report of a take-over bid and to pay the accompanying fee in each of the Jurisdictions.

Unitholder means a beneficial holder of Class A Units, Class F Units, Class U Units or Class V Units of the Fund.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation incorporated under the laws of Ontario.

2. The Filer's registered office is located at 130 Adelaide Street, Suite 1700, Toronto, Ontario.

3. The Filer is registered as a portfolio manager, exempt market dealer and investment fund manager in Ontario and is responsible for the administration of the Fund.

4. The Filer is not in default of securities legislation in any of the Jurisdictions.

5. The Fund is a non-redeemable investment fund governed by the laws of Ontario and is a reporting issuer under the laws of each of the Jurisdictions. The Fund is authorized to issue an unlimited number of classes of units and an unlimited number of units of each class.

6. On May 28, 2013, the Fund filed a final long-form prospectus with the securities regulatory authorities in each of the Jurisdictions to qualify the issuance of the Class A Units and Class F Units of the Fund in the Jurisdictions. The Class A Units and Class F units are Canadian dollar denominated. Distributions and redemption proceeds are payable in Canadian dollars on such units.

7. On July 23, 2014, the Fund filed a final long-form prospectus with the securities regulatory authorities in each of the Jurisdictions to qualify the issuance of the Class U Units and Class V Units of the Fund in the Jurisdictions. The Class U Units and Class V Units are U.S. dollar denominated. Distributions and redemption proceeds are payable in U.S. dollars on such units.

8. The Fund is not in default of securities legislation in any of the Jurisdictions.

9. As at April 30, 2015, there were 3,494,808 Class A Units (which amounts to 85.22% of the total number of units of all classes outstanding), 365,407 Class F Units (which amounts to 8.91% of the total number of units of all classes outstanding), 213,198 Class U Units (which amounts to 5.20% of the total number of units of all classes outstanding) and 27,507 Class V Units (which amounts to 0.67% of the total number of units of all classes outstanding) issued and outstanding.

10. The Class A Units and Class U Units of the Fund are listed on the TSX under the symbol PFD.UN and PFD.U, respectively.

11. The net asset value per Class A Unit, Class F Unit, Class U Unit and Class V Unit of the Fund is calculated and published on every business day and is made available daily at www.purposeinvest.com.

12. The holders of Class A Units, Class F Units, Class U Units and Class V Units each have the right to vote at a meeting of Unitholders on matters in respect of which they are entitled to vote at law or under the Declaration of Trust.

13. Holders of Class A Units, Class F Units, Class U Units and Class V Units are entitled to convert their Class A Units, Class F Units, Class U Units or Class V Units, as applicable, into units of any other class of the Fund. Holders who convert their Class A Units, Class F Units, Class U Units or Class V Units receive for each Class A Unit, Class F Unit, Class U Unit or Class V Unit converted, that number of units of the class into which such units are being converted, equal to the NAV per Class A Unit, Class F Unit, Class U Unit or Class V Unit, as the case may be, divided by the NAV per unit of the class into which such units are being converted into, as of the close of trading on the date of conversion.

14. As Class F Units and Class V Units are designed for fee-based and/or institutional accounts (which generally results in larger investment by a smaller number of holders compared to the number of Class A Units issued) a smaller number of Class F Units and Class V Units were issued.

15. As Class U Units are designed for investors who wish to purchase units of the Fund in U.S. dollars (which generally results in investment by a smaller number of holders compared to the number of Class A Units issued) a smaller number of Class U Units were issued.

16. Except as noted above, the Class A Units, Class F Units, Class U Units and Class V Units have the same rights and attributes and are the same in all respects.

17. Although the acquisition of Class A Units, Class F Units, Class U Units and/or Class V Units in the secondary market can be subject to the Take-over Bid Requirements:

(a) given the size of the Fund and rights of the Filer as manager of the Fund to operate the Fund, the risk that one or more unitholders may exercise control or direction over the Fund is remote; and

(b) it may be difficult for purchasers of Class A Units, Class F Units, Class U Units and Class V Units to monitor compliance with Take-over Bid Requirements because the number of outstanding units will be in flux as a result of the redemption and conversion rights of each class of units.

18. The application of the Take-over Bid Requirements to the Class A Units, Class F Units, Class U Units and Class V Units of the Fund could have an adverse impact upon unit liquidity because they could cause a large unitholder not to acquire or to cease acquiring units of a class of the Fund due to concerns about inadvertently triggering the Take-over Bid Requirements.

Decision

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 is that the Exemption Sought is granted so long as a purchaser making an offer to acquire Class A Units, Class F Units, Class U Units or Class V Units of the Fund, as the case may be, either alone or acting jointly and in concert with any other person, will not beneficially own or have control or direction over 20% or more of the total number of outstanding Units of all Classes of Units of the Fund as a result of such purchase.

"Mary G. Condon"
Commissioner
Ontario Securities Commission
 
"Janet Leiper"
Commissioner
Ontario Securities Commission