Securities Law & Instruments


Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief from the requirement in subsections 5.2(1), (3) and (4) of Regulation 81-101 to allow the Filer to physically deliver or electronically send (in a single email attachment or single document accessible through a hyperlink) one document, containing fund facts document, along with a cover page in respect of purchases of securities made pursuant to certain asset allocation services offered by the Filer, subject to certain conditions.

Applicable Legislative Provisions

National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 5.2(1), (3) and (4).

[Translation]

August 8, 2016

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUÉBEC AND ONTARIO
(the Jurisdictions)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
NATIONAL BANK INVESTMENTS INC.
(the Filer)

AND

IN THE MATTER OF
THE NATIONAL BANK MUTUAL FUNDS
(the Funds)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from subsections 5.2(1), (3) and (4) of Regulation 81-101 respecting Mutual Funds Prospectus Disclosure (c.V-1.1, r. 38) (Regulation 81-101) regarding the following:

(i)            the restriction to the effect that a fund facts document must not be combined with any other materials or documents;

(ii)           the restriction to the effect that, if multiple fund facts documents are being delivered electronically at the same time, those fund facts documents cannot be combined into a single email attachment or a single document accessible through a hyperlink; and

(iii)          the restriction to the effect that, if a fund facts document is delivered or sent under certain exceptions from the pre-sale delivery requirement of a fund facts document under sections 3.2.02, 3.2.03 or 3.2.04 of Regulation 81-101, the fund facts document may be combined with certain other materials and documents only as permitted under Regulation 81-101;

in order to physically deliver or electronically send in a single email attachment or single document accessible through a hyperlink, one document containing the fund facts documents for all the Funds forming part of a model portfolio along with a cover page, in respect of purchases of securities of the Funds under certain asset allocation services offered by the Filer (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a)           the Autorité des marchés financiers is the principal regulator for this application;

(b)           the Filer has provided notice that subsection 4.7(1) of Regulation 11-102 respecting Passport System (c. V-1.1, r.1) (Regulation 11-102) is intended to be relied upon in the jurisdictions of Canada other than the Jurisdictions; and

(c)           the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions (c. V-1.1, r.3), Regulation 11-102, Regulation 81-101 and Regulation 81-102 respecting Investment Funds (c. V-1.1, r. 39) (Regulation 81-102) have the same meaning if used in this decision, unless otherwise defined.

Representations

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

The Filer and the Funds

1.             The Filer is a corporation amalgamated under the laws of Canada.

2.             The head office of the Filer is located in Montréal, Québec.

3.             The Filer is or will be the investment fund manager of each Fund. The Filer is duly registered as an investment fund manager in each of the provinces of Québec, Ontario, and Newfoundland and Labrador, and as a mutual fund dealer in the jurisdictions of Canada.

4.             The Filer acts as the principal distributor or as the participating dealer of securities of the Funds.

5.             The Funds are or will be either open-ended mutual fund trusts established under the laws of the province of Québec or Ontario, or mutual fund corporations governed under the laws of Canada.

6.             The Funds are or will be reporting issuers in one or more of the jurisdictions of Canada and are or will be subject to the provisions of Regulation 81-102.

7.             Neither the Filer nor the Funds are in default of securities legislation in the jurisdictions of Canada.

Asset allocation service

8.             As an investment fund manager, the Filer offers optional asset allocation services, including the Strategic Portfolio Service, the National Bank Managed Portfolio Service and the NBI Private Wealth Management Service (collectively, the Services).

9.             Under each of the Services, the Filer offers model portfolios of Funds that allow purchasers to match their risk profile and investment objectives.

10.          Each model portfolio is comprised entirely of Funds for which the Filer acts as an investment fund manager.

11.          Each purchaser of a selected model portfolio under one of the Services must accept all Funds and the allocation (in the case of the Strategic Portfolio Service) or the target, minimum and maximum allocations (in the case of the Managed Portfolio Service or the NBI Private Wealth Management Service) of each Fund in the model portfolio.

Reasons supporting the Exemption Sought

12.          Each purchaser makes one investment decision, corresponding to their chosen model portfolio, which causes the purchaser to invest in multiple Funds comprising the chosen model portfolio.

13.          The Filer believes that combining all of the fund facts documents for the Funds in a model portfolio in one document, in paper or electronic form in a single email attachment or single document accessible through a hyperlink, along with a cover page, rather than delivering or sending separate multiple fund facts documents:

(a)           will allow purchasers to understand that the model portfolio is composed of several Funds with their own characteristics;

(b)           will facilitate the review of information provided in the fund facts documents of each Fund forming part of the model portfolio; and

(c)           will not be so extensive as to cause a reasonable person to conclude that the combination prevents the information from being presented in a simple, accessible and comparable format.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, provided that the Filer physically delivers or electronically sends, in a single email attachment or single document accessible through a hyperlink, one document containing only the following:

(a)           the fund facts documents for all the Funds in the model portfolio; and

(b)           a cover page containing:

(i)            the name of the particular model portfolio,

(ii)           a statement about the delivery of the fund facts documents that make up the model portfolio,

(iii)          the name of each Fund comprising the model portfolio, and

(iv)          the allocation (in the case of the Strategic Portfolio Service) or target, minimum and maximum allocations (in the case of the National Bank Managed Portfolio Service and the NBI Private Wealth Management Service) of each Fund in the model portfolio;

when a fund facts document is required to be delivered or sent to the purchaser, for all the Funds forming part of a model portfolio under a Service.

“Hugo Lacroix”
Senior Director, Investment Funds