National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted to mutual funds for extension of lapse date of their prospectus -- 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).
April 11, 2018
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 BMO INVESTMENTS INC. (the Filer) AND IN THE MATTER OF BMO ASCENT INCOME PORTFOLIO, BMO ASCENT CONSERVATIVE PORTFOLIO, BMO ASCENT BALANCED PORTFOLIO, BMO ASCENT GROWTH PORTFOLIO AND BMO ASCENT EQUITY GROWTH PORTFOLIO (the Funds)
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Funds for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the time limits for the renewal of the simplified prospectus of the Funds be extended to the time limits that would apply if the lapse date of the simplified prospectus of the Funds was April 24, 2018 (the Requested Relief).
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 subsection 4.7(1) of Multilateral Instrument 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).
Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation governed by the laws of Canada with its head office in Toronto, Ontario.
2. The Filer is registered as an investment fund manager in Ontario, Quebec and Newfoundland and Labrador, and as a mutual fund dealer in each of the Jurisdictions.
3. The Filer is the investment fund manager of each Fund.
4. The Filer is the trustee and manager of the Funds. The Filer is also the manager of, among other funds, 121 other BMO mutual funds (the BMO Funds) that are offered in each of the Jurisdictions under a simplified prospectus dated April 24, 2017, as amended by amendment no. 1 dated November 10, 2017 and amendment no. 2 dated January 29, 2018 (the BMO Funds Prospectus). The lapse date of the BMO Funds Prospectus is April 24, 2018.
5. Neither the Funds nor the Filer is in default of securities legislation in any of the Jurisdictions.
6. Each of the Funds is an open-ended mutual fund trust established under the laws of Ontario by an amended and restated master declaration of trust dated as of April 19, 2016, together with an amended and restated Schedule A dated April 18, 2017. Each of the Funds is a reporting issuer in each of the Jurisdictions.
7. Units of the Funds are currently qualified for distribution in each of the Jurisdictions under the current simplified prospectus and annual information form of the Funds dated April 18, 2017, as amended by amendment no. 1 dated August 30, 2017 and related Fund Facts dated August 30, 2017 (collectively, the Current Prospectus).
8. The lapse date for the Current Prospectus is April 18, 2018 (the Current Lapse Date). A pro forma simplified prospectus for the Funds was not filed 30 days prior to the Current Lapse Date, i.e. by March 19, 2018. Accordingly, absent the Requested Relief, pursuant to the Legislation, the distribution of units of the Funds will have to cease on the Current Lapse Date.
9. The Filer wishes to combine the simplified prospectus of the Funds with the BMO Funds Prospectus. Offering the Funds under the same renewal simplified prospectus and annual information form (the Prospectus Documents) as the BMO Funds would facilitate the distribution of the Funds in the Jurisdictions under the same prospectus disclosure and would also assist in disseminating information with respect to the Funds and the BMO Funds in such matters such as switching between the Funds and the BMO Funds. The Funds share many common operational and administrative features with the BMO Funds and combining them in the same simplified prospectuses will allow investors to more easily compare the features of the BMO Funds and the Funds.
10. The Filer is in the process of creating ETF series of certain BMO Funds and thus requires the full 30 day period between pro forma and final to address any regulatory comments on the Prospectus Documents of the BMO Funds. In addition, it would be impractical to alter and modify all the dedicated systems, procedures and resources required to prepare the Prospectus Documents of the BMO Funds, and unreasonable to incur the costs and expenses associated therewith, so that the Prospectus Documents of the BMO Funds can be filed earlier with the Prospectus Documents of the Funds. As the Prospectus Documents of the BMO Funds are very large documents and there is an in-depth internal review process that the Filer undertakes when renewing those documents, the Filer will not have sufficient time to finalize and file the final Prospectus Documents of the BMO Funds by April 18, 2018, being the deadline for the Current Lapse Date.
11. The Filer may make changes to the features of the BMO Funds as part of the process of renewing the BMO Funds' Prospectus Documents. The ability to file the Prospectus Documents of the Funds with those of the BMO Funds will ensure that the Filer can make the operational and administrative features of the Funds and the BMO Funds consistent with each other, if necessary.
12. If the Requested Relief is not granted, it will be necessary to renew the Prospectus Documents of the Funds twice within an extremely short period of time in order to consolidate the Prospectus Documents of the Funds with the Prospectus Documents of the BMO Funds, given the operational challenges (described above) associated with renewing the Prospectus Documents of the BMO Funds on an earlier timeframe.
13. There have been no material changes in the affairs of the Funds since the date of the Current Prospectus. Accordingly, the Current Prospectus continues to provide accurate information regarding the Funds.
14. Given the disclosure obligations of the Filer and the Funds, should any material changes occur, the Current Prospectus will be amended as required under the Legislation.
15. Investors who purchase securities of the Funds after August 30, 2017 will be sent or delivered the Fund Facts dated August 30, 2017 and the simplified prospectus and annual information form of the Funds dated April 18, 2017, as amended by amendment no. 1 dated August 30, 2017 remains available to investors upon request.
16. The Requested Relief will not affect the currency or accuracy of the information contained in the Current Prospectus and will therefore not be prejudicial to the public interest.
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.