Securities Law & Instruments


Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief granted to an exchange-traded mutual fund for extension of lapse date of their prospectus for 36 days – Filer will incorporate offering of the mutual fund under the same offering documents as related family of funds when they are renewed – Extension of lapse date will not affect the currency or accuracy of the information contained in the current prospectus.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).

November 18, 2016

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
FIRST ASSET INVESTMENT MANAGEMENT INC.
(the Filer)

AND

IN THE MATTER OF
FIRST ASSET SHORT TERM GOVERNMENT
BOND INDEX CLASS ETF
(the Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Fund for a decision under the securities legislation of the Jurisdiction (the Legislation) that the time limits for the renewal of the prospectus of the Fund dated February 23, 2016 (the Prospectus) be extended to those time limits that would apply if the lapse date were April 1, 2017 (the Requested Relief).

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

(i)            the Ontario Securities Commission is the principal regulator for this application; and

(ii)           the Filer has provided notice that subsection 4.7(1) of Multilateral Instru-ment 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 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.

1.             The Filer is a corporation incorporated under the laws of Ontario. The Filer’s head office is located in Toronto, Ontario.

2.             The Filer is registered as a portfolio manager in Ontario and as an investment fund manager under the securities legislation of each of Ontario, Québec and Newfoundland and Labrador. The Filer is the investment fund manager of the Fund.

3.             The Fund is an exchange-traded mutual fund (ETF) established under the laws of Ontario, and is a reporting issuer as defined in the securities legislation of each of the Jurisdictions.

4.             Neither the Filer nor the Fund is in default of securities legislation in any of the Jurisdictions.

5.             The Fund currently distributes securities in the Jurisdictions under the Prospectus. Securities of the Fund trade on the Toronto Stock Exchange with the ticker symbol “FGB”.

6.             Pursuant to subsection 62(1) of the Act, the lapse date of the Prospectus is February 23, 2017 (the Lapse Date). Accordingly, under subsection 62(2) of the Act, the distribution of securities of the Fund would have to cease on the Lapse Date unless: (i) the Fund files a pro forma prospectus at least 30 days prior to February 23, 2017; (ii) the final prospectus is filed no later than 10 days after February 23, 2017; and (iii) a receipt for the final prospectus is obtained within 20 days of February 23, 2017.

7.             In addition to securities of the Fund, the Prospectus qualifies the distribution of securities of four other ETFs (the Terminating Funds).

8.             On November 9, 2016, the Filer announced that it intends to terminate the Terminating Funds on or about January 16, 2017. As a result, after that date, the Fund will be the only issuer whose securities are qualified by the Prospectus.

9.             The Filer is the investment fund manager of three other ETFs (the Affiliated Funds) that currently distribute their securities to the public under a prospectus that has a lapse date of April 1, 2017. The Fund and each Affiliated Fund is a class of shares of First Asset Fund Corp.

10.          The Filer wishes to combine the Prospectus with the prospectus of the Affiliated Funds in order to reduce the cost of renewing the Prospectus and on-going printing and related costs. Offering the Fund under the same prospectus as the Affiliated Funds would assist in disseminating information with respect to the Fund and the Affiliated Funds in matters such as switching between the Fund and the Affiliated Funds. Further, the Affiliated Funds share many common operational and administrative features with the Fund, and combining them in the same prospectus will allow investors to more easily compare their features.

11.          It would be impractical to alter and modify all the dedicated systems, procedures and resources required to prepare the renewal prospectus and ETF summary document for the Affiliated Funds, and unreasonable to incur the costs and expenses associated therewith, so that the renewal prospectus for the Affiliated Funds can be filed on or before the Lapse Date.

12.          The Filer may make minor changes to the features of the Affiliated Funds as part of the process of renewing the Affiliated Funds' prospectus. The ability to incorporate the Fund into the prospectus of the Affiliated Funds will ensure that the Filer can make the operational and administrative features of the Fund and the Affiliated Funds consistent with each other, if necessary.

13.          There have been no material changes in the affairs of the Fund since the date of the Prospectus. Accordingly, the Prospectus and current ETF summary document of the Fund represent current information regarding the Fund.

14.          Given the disclosure obligations of the Fund, should any material changes occur, the Prospectus will be amended as required under the Legislation.

15.          The Requested Relief will not affect the accuracy of the information contained in the Prospectus and will therefore not be prejudicial to the public interest.

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 under the Legislation is that the Requested Relief is granted.

“Vera Nunes”
Manager, Investment Funds and Structured Products
Ontario Securities Commission