Securities Law & Instruments

Headnote

 

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – fund family relief from the requirement to send a printed information circular to registered holders of the securities of an investment fund - relief subject to a number of conditions, including sending an explanatory document in lieu of the printed information circular and giving securityholders the option to request and obtain at no charge a printed information circular – notice-and-access for investment funds – National Instrument 81-106 Investment Fund Continuous Disclosure.

 

Applicable Legislative Provisions

 

National Instrument 81-106 Investment Fund Continuous Disclosure, s. 12.2(2)(a).

 

January 19, 2017

 

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

 

AND

 

IN THE MATTER OF

THE PROCESS FOR

EXEMPTIVE RELIEF APPLICATIONS IN

MULTIPLE JURISDICTIONS

 

AND

 

IN THE MATTER OF

MIDDLEFIELD LIMITED

(the Filer)

 

DECISION

 

Background

 

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer, on behalf of existing and future investment funds (each, a Fund) that are or will be managed from time to time by the Filer or by an affiliate of it or a successor to either it or an affiliate of it (each, a Middlefield Entity), for a decision under the securities legislation of the Jurisdictions (the Legislation) granting an exemption from the requirement contained in paragraph 12.2(2)(a) of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) that a person or company that solicits proxies, by or on behalf of management of a Fund, send an information circular to each registered holder of securities of a Fund whose proxy is solicited, to permit use of a notice-and-access process (the Exemption Sought).

 

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

 

the Alberta Securities Commission is the principal regulator for this application;

 

the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Manitoba, Saskatchewan, Québec, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, Nunavut, Yukon and Northwest Territories; and

 

this 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 MI 11-102, NI 81-106, National Instrument 14-101 Definitions, National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) and National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer (NI 54-101) have the same meaning in this decision, unless otherwise defined herein.

 

Representations

 

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

 

The Filer and the Funds

 

1.             The head office of the Filer is located in Calgary, Alberta.

 

2.             The Filer is registered as an investment fund manager in Alberta, Ontario, Québec and Newfoundland and Labrador.

 

3.             The Funds are, or will be, managed by a Middlefield Entity.

 

4.             The Funds are, or will be, investment funds and are, or will be, reporting issuers in one or more of the jurisdictions of Canada.

 

5.             No existing Middlefield Entity is in default of any of the requirements of securities legislation in any of the jurisdictions of Canada.

 

Meetings of Securityholders of the Funds

 

6.             Pursuant to applicable legislation, a Middlefield Entity must call a meeting (Meeting) of securityholders of each Fund from time to time to consider and vote on matters requiring securityholder approval.

 

7.             In connection with a Meeting, a Fund is required to comply with the requirements in NI 81-106 regarding the sending of proxies and information circulars, which include a requirement that a person or company that solicits proxies by or on behalf of management of a Fund from registered holders send to each such registered holder, with the notice of Meeting, an information circular prepared in compliance with the requirements of Form 51-102F5 of NI 51-102.

 

8.             A Fund is also required to comply with NI 51-102 in respect of communicating with registered holders of its securities and NI 54-101 in respect of communicating with beneficial owners of its securities.

 

Notice-and-Access Procedure – Corporate Finance Issuers

 

9.             Section 9.1.1 of NI 51-102 permits, if certain conditions are met, a reporting issuer that is not an investment fund to use a notice-and-access procedure and send to each of the registered holders of its voting securities, instead of an information circular, a notice that contains certain specific information regarding the Meeting and an explanation of the notice-and-access procedure.

 

10.          Section 2.7.1 of NI 54-101 permits a reporting issuer that is not an investment fund to use a similar procedure to communicate with each beneficial owner of its securities.

 

Reasons supporting the Exemption Sought

 

11.          There is no policy reason to treat a Meeting of investment fund securityholders differently than a meeting of non-investment fund issuer securityholders. The notice-and- access procedure set forth in NI 51-102 and in NI 54-101 can be used by a non-investment fund issuer for a meeting of its securityholders in order to send a notice-and-access document instead of an information circular. It would not be detrimental to the protection of investors to allow an investment fund to also use a notice-and-access procedure and to send a notice-and-access document, instead of the information circular.

 

12.          If the Exemption Sought is granted, securityholders of the Funds will have access to the same disclosure currently available.

 

All securityholders of record entitled to receive an information circular will receive instructions on how to access the information circular and will be able to receive a printed copy, without charge, if they so desire.

 

The conditions to the Exemption Sought mandate that a notice-and-access document will be sent to each securityholder sufficiently in advance of a Meeting so that if a securityholder wishes to receive a printed copy of the information circular, there will be sufficient time for the Middlefield Entity, directly or through an agent, to send the information circular.

 

13.          In accordance with the standard of care owed by a Middlefield Entity to the relevant Fund pursuant to applicable legislation, the Middlefield Entity will only use the notice-and-access procedure for a Meeting if it has concluded that it is appropriate and consistent to do so, also taking into account the purpose of the Meeting and whether the Fund would obtain a better participation rate by sending the information circular with the other proxy-related materials.

 

There are significant costs involved in the printing and delivery of the proxy-related materials, including information circulars, to securityholders in the Funds.

 

Decision

 

Each of the Decision Makers 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 Makers under the Legislation is that the Exemption Sought in respect of each Fund is granted provided that:

 

1.             Each registered holder or beneficial owner, as applicable, of securities of the Fund is sent a document that contains the following information and no other information (the Notice-and-Access Document):

 

the date, time and location of the meeting for which the proxy-related materials are being sent;

 

a description of each matter or group of related matters identified in the form of proxy to be voted on unless that information is already included in a Form 54-101F6 or Form 54-101F7 as applicable, that is being sent to the beneficial owner of securities of the Fund under condition (2)(c) of this decision;

 

the website addresses for SEDAR and the non-SEDAR website where the proxy-related materials are posted;

 

a reminder to review the information circular before voting;

 

an explanation of how to obtain a paper copy of the information circular and, if applicable, the financial statements;

 

a plain-language explanation of the Notice-and-Access Procedure, described in paragraph 2 of this decision, that includes the following information:

 

(i)            the estimated date and time by which a request for a paper copy of the information circular and, if applicable, the financial statements of the Fund, is to be received in order for the registered holder or beneficial owner, as applicable, to receive the paper copy in advance of any deadline for the submission of voting instructions for the meeting;

 

(ii)           an explanation of how the registered holder or beneficial owner, as applicable, of securities of the Fund is to return voting instructions, including any deadline for return of those instructions;

 

(iii)          the sections of the information circular where disclosure regarding each matter or group of related matters identified in the Notice-and-Access Document can be found; and

 

(iv)          a toll-free telephone number the registered holder or beneficial owner, as applicable, of securities of the Fund can call to get information about the Notice-and-Access Procedure.

 

A Middlefield Entity, on behalf of the Fund, sends the Notice-and-Access Document in compliance with the following procedure (the Notice-and-Access Procedure):

 

the proxy-related materials are sent a minimum of 30 days before the applicable Meeting and a maximum of 50 days before the Meeting;

 

if proxy-related materials are sent:

 

(i)            directly to a NOBO, then the Fund must send the Notice-and-Access Document and, if applicable, any paper copies of information circulars and the financial statements, at least 30 days before the date of the Meeting; and

 

(ii)           indirectly to a beneficial owner, then the Fund must send the Notice-and-Access Document and, if applicable, any paper copies of information circulars and the financial statements to the proximate intermediary (A) at least 3 business days before the 30th day before the date of the Meeting, in the case of proxy-related materials that are to be sent on by the proximate intermediary by first class mail, courier or the equivalent, or (B) at least 4 business days before the 30th day before the date of the Meeting, in the case of proxy-related materials that are to be sent using any other type of prepaid mail;

 

using the procedures referred to in section 2.9 or 2.12 of NI 54-101, as applicable, the beneficial owner of securities of the Fund is sent, by prepaid mail, courier or the equivalent, the Notice-and-Access Document and a Form 54-101F6 or Form 54-101F7, as applicable;

 

a Middlefield Entity, on behalf of the Fund, files on SEDAR the notification of meeting and record dates on the same date that it sends the notification of meeting date and record date pursuant to subsection 2.2(1) of NI 54-101 (as such time may be abridged);

 

public electronic access to the information circular and the Notice-and-Access Document is provided on or before the date that the Notice-and-Access Document is sent to registered holders and beneficial owners, as applicable, of securities of the Fund in the following manner:

 

(i)            the information circular and the Notice-and-Access Document are filed on SEDAR; and

 

(ii)           the information circular and the Notice-and-Access Document are posted until the date that is one year from the date that the documents are posted, on a website of the Fund or of the applicable Middlefield Entity;

 

a toll-free telephone number is provided for use by the registered holders and beneficial owners, as applicable, of securities of the Fund to request a paper copy of the information circular and, if applicable, the financial statements of the Fund, at any time from the date that the Notice-and-Access Document is sent to the registered holders and the beneficial owners, as applicable, up to and including the date of the meeting, including any adjournment;

 

if a request for a paper copy of the information circular and, if applicable, the financial statements of the Fund, is received at the toll-free telephone number provided in the Notice-and-Access Document or by any other means, a paper copy of any such document requested is sent free of charge to the registered holder or beneficial owner, as applicable, at the address specified in the request in the following manner:

 

(i)            in the case of a request received prior to the date of the meeting, within 3 business days after receiving the request, by first class mail, courier or the equivalent; and

 

(ii)           in the case of a request received on or after the date of the meeting, and within one year of the date the information circular is filed on SEDAR, within 10 calendar days after receiving the request, by prepaid mail, courier or the equivalent;

 

a Notice-and-Access Document is only accompanied by:

 

(i)            a form of proxy;

 

(ii)           if applicable, the financial statements of the Fund to be presented at the meeting; and

 

(iii)          if the meeting is to approve a reorganization of the Fund with a mutual fund, as contemplated by paragraph 5.1(1)(f) of National Instrument 81-102 Investment Funds, the Fund Facts document, ETF summary document or ETF Facts, as applicable, for the continuing mutual fund;

 

a Notice-and-Access Document is not combined as a single document with any document other than a form of proxy;

 

if a Middlefield Entity, directly or through its agent, receives a request for a copy of the information circular and if applicable, the financial statements of the Fund, using the toll-free telephone number referred to in the Notice-and-Access Document or by any other means, it must not do any of the following:

 

(i)            ask for any information about the registered holder or beneficial owner, other than the name and address to which the information circular and, if applicable, the financial statements of the Fund are to be sent; and

 

(ii)           disclose or use the name or address of the registered holder or beneficial owner for any purpose other than sending the information circular and, if applicable, the financial statements of the Fund;

 

a Middlefield Entity, directly or through its agent, must not collect information that can be used to identify a person or company who has accessed the website address to which it posts the proxy-related materials pursuant to condition (2)(e)(ii) of this decision.

 

in addition to the proxy-related materials posted on a website in the manner referred to in condition (2)(e)(ii) of this decision, the Middlefield Entity, must also post on the website the following documents:

 

(i)            any disclosure document regarding the Meeting that the Middlefield Entity, on behalf of the Fund, has sent to registered holders or beneficial owners of securities of the Fund; and

 

(ii)           any written communications the Middlefield Entity, on behalf of the Fund, has made available to the public regarding each matter or group of matters to be voted on at the meeting, whether or not they were sent to registered holders or beneficial owners of securities of the Fund;

 

materials that are posted on a website pursuant to condition (2)(e)(ii) of this decision must be posted in a manner and be in a format that permit an individual with a reasonable level of computer skill and knowledge to do all of the following easily:

 

(i)            access, read and search the documents on the website; and

 

(ii)           download and print the documents;

 

despite subsection 2.1(b) of NI 54-101, if the Fund relies upon this decision, it must set a record date for notice that is no fewer than 40 days before the date of the meeting;

 

in addition to section 2.20 of NI 54-101, the Fund only abridges the time prescribed in subsection 2.1(b), 2.2(1) or 2.5(1) of NI 54-101 if the Fund fixes the record date for notice to be at least 40 days before the date of the meeting and sends the notification of meeting and record dates at least 3 business days before the record date for notice;

 

the notification of meeting date and record date sent pursuant to paragraph 2.2(1)(b) of NI 54-101 also specifies that the Fund is sending proxy-related materials to registered holders or beneficial owners, as applicable, of securities of the Fund using the Notice-and-Access Procedure pursuant to the terms of this decision;

 

the Middlefield Entity, on behalf of the Fund, provides disclosure in the information circular to the effect that the Fund is sending proxy-related materials to registered holders or beneficial owners, as applicable, of securities of the Fund using the Notice-and-Access Procedure pursuant to the terms of this decision; and

 

the Middlefield Entity pays for delivery of the information circular and, if applicable, the financial statements of the Fund, to each registered holder and beneficial owner, as applicable, of securities of the Fund that requests them following receipt of the Notice-and-Access Document.

 

The Exemption Sought terminates on the coming into force of any legislation or regulation allowing an investment fund to use a notice-and-access procedure.

 

“Tom Graham”

Director

Corporate Finance