Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Closed-end investment fund exempt from prospectus requirements in connection with resale of securities purchased under market purchase or redemption programs -- relief needed so that repurchased securities can be resold in the market without the need for a prospectus each time -- fund is a reporting issuer and subject to continuous disclosure requirements -- resales by the fund also subject to insider trading restrictions, including applicable hold periods -- resales of repurchased or redeemed securities will be made subject to same conditions applicable to resales by a control person -- sales to be conducted through the TSX -- securities resold in a calendar year must be equivalent to no more than 5% of the fund's outstanding units at beginning of that year -- any repurchased securities unsold after 16 months will be cancelled.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53(1), 74(1).

September 1, 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 CALDWELL U.S. DIVIDEND ADVANTAGE FUND (the Filer)

DECISION

Background

The securities regulatory authority or regulator in the Jurisdiction (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting the Filer from the requirement to file a prospectus (the Prospectus Requirement) in connection with the distribution of Units of the Filer (the Units) that have been repurchased by the Filer pursuant to the Purchase Programs (as that term is defined below) or redeemed by the Filer pursuant to the Redemption Programs (as that term is defined below) (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, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Northwest Territories, Nunavut and Yukon.

Interpretation

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

Representations

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

1. The Filer is an unincorporated closed-end investment trust established under the laws of Ontario.

2. The holders of units (the Units) of the Filer (collectively, the Unitholders) are not entitled to receive on demand an amount computed by reference to the value of a proportionate interest in the whole or in part of the net assets of the Filer. Accordingly, the Filer is not considered a "mutual fund" as that term is defined in the Legislation.

3. The Filer is a reporting issuer or equivalent in each of the provinces and territories of Canada and is not in default of any of the requirements of securities legislation applicable to it.

4. The Units are listed and posted for trading on the Toronto Stock Exchange (the TSX). As of August 5, 2015 the Filer had 5,166,200 Units issued and outstanding.

5. Caldwell Investment Management Ltd., which was incorporated under the Business Corporations Act (Ontario), is the manager of the Filer.

6. CST Trust Company is the trustee of the Filer.

Mandatory Purchase Program

7. The constating document of the Filer provides that the Filer, subject to certain exceptions and compliance with any applicable regulatory requirements, is obligated to purchase (the Mandatory Purchase Program) any Units offered on the TSX (or such other exchange or market on which the Units are then listed and primarily traded) if, at any time after the closing of the Filer's initial public offering, the price at which Units are then offered for sale on the TSX (or such other exchange or market on which the Units are then listed and primarily traded) is less than 95% of the net asset value of the Filer (NAV) per Unit as at the close of business in Toronto, Ontario on the immediately preceding business day, provided that the maximum number of Units to be purchased by the Filer pursuant to the Mandatory Purchase Program in any calendar quarter will be 1.25% of the number of Units outstanding at the beginning of such period.

Discretionary Purchase Program

8. Subject to applicable law and stock exchange requirements, the Filer may, in its sole discretion, from time to time, purchase (in the open market) Units for cancellation based on the Manager's assessment that such purchases are accretive to Unitholders, in all cases at a price per Unit not exceeding the most recently calculated NAV per Unit immediately prior to the date of any such purchase of Units (the Discretionary Purchase Program and together with the Mandatory Purchase Program, the Purchase Programs).

Monthly Redemptions

9. Subject to the Filer's right to suspend redemptions in certain circumstances and certain conditions, Units may be surrendered at any time for redemption (the Monthly Redemption Program) on the second last business day of any month (other than the month of November (except in 2015, 2016 and 2017)) in order to be redeemed at a redemption price per Unit equal to the Monthly Redemption Amount (as defined in the Filer's long form (final) prospectus dated May 28, 2015).

Annual Redemption

10. Subject to the Filer's right to suspend redemptions in certain circumstances, Units may be surrendered for redemption (the Annual Redemption Program and together with the Monthly Redemption Program, the Redemption Programs) on the second last business day in November of each year (the Annual Redemption Date) commencing in 2018 at a redemption price per Unit equal to the applicable NAV per Unit on the Annual Redemption Date, less any costs and expenses incurred by the Filer in order to fund such redemption, including brokerage costs and less any net realized capital gains or income, as applicable, of the Fund that are allocated and/or designated to redeeming Unitholders concurrently with the proceeds of disposition on redemption.

Resale of Repurchased or Redeemed Units

11. Purchases of Units made by the Filer under the Purchase Programs or Redemption Programs are exempt from the issuer bid requirements of the Legislation pursuant to exemptions contained therein.

12. The Filer wishes to resell, in its sole discretion and at its option, through one or more securities dealers and through the facilities of the TSX (or another exchange on which the Units are then listed), the Units repurchased by the Filer pursuant to the Purchase Programs (Repurchased Units), or redeemed pursuant to the Redemption Programs (Redeemed Units).

13. All Repurchased Units or Redeemed Units will be held by the Filer for a period of four months after the repurchase or redemption thereof by the Filer (the Holding Period), prior to any resale.

14. The resale of Repurchased Units or Redeemed Units will not have a significant impact on the market price of the Units.

15. Repurchased Units or Redeemed Units held by the Filer for resale will not be resold for less than the applicable repurchase or redemption price paid for such Units by the Filer.

16. Repurchased Units or Redeemed Units that the Filer does not resell within 12 months after the Holding Period (that is, within 16 months after the date of repurchase or redemption, as applicable) will be cancelled by the Filer.

17. During any calendar year, the Filer will not resell an aggregate number of Repurchased Units and Redeemed Units that is greater than 5% of the number of Units outstanding at the beginning of such calendar year.

18. Prospective purchasers of Repurchased Units or Redeemed Units will have access to the Filer's continuous disclosure, which will be filed on SEDAR.

19. The Legislation provides that a trade by or on behalf of an issuer in previously issued securities of that issuer that have been purchased or redeemed by that issuer is a distribution and, as such, is subject to the Prospectus Requirement. In the absence of the Exemption Sought, any sale by the Filer of Repurchased Units or Redeemed Units would be a distribution that is subject to the Prospectus Requirement.

Decision

The Decision Maker is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Maker under the Legislation is that the Exemption Sought is granted provided that:

(a) the Repurchased Units and Redeemed Units are otherwise sold by the Filer in compliance with the Legislation through the facilities of and in accordance with the regulations and policies of the TSX or of any other exchange on which the Units are then listed; and

(b) the Filer complies with the conditions of paragraphs 1 through 5 of subsection 2.8(2) of National Instrument 45-102 Resale of Securities with respect to the sale of the Repurchased Units and Redeemed Units.

"Timothy Moseley"
Commissioner
Ontario Securities Commission
 
"Christopher Portner"
Commissioner
Ontario Securities Commission