C.S.T. Spark Inc. et al.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted under subsection 62(5) of the Securities Act to permit extension of lapse date of funds' prospectus to facilitate its combination with the prospectus of another fund under common management.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).
October 31, 2022
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 C.S.T. SPARK INC. (the Filer) AND CST SPARK GRADUATION PORTFOLIO CST SPARK 2026 EDUCATION PORTFOLIO CST SPARK 2029 EDUCATION PORTFOLIO CST SPARK 2032 EDUCATION PORTFOLIO CST SPARK 2035 EDUCATION PORTFOLIO CST SPARK 2038 EDUCATION PORTFOLIO (THE FUNDS)
DECISION
Background
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 (the Legislation) that the time limits for the renewal of the simplified prospectus and fund facts of the Funds dated November 2, 2021 (the Current Prospectus) be extended to the time limits that would apply as if the lapse date was January 5, 2023 (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 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 the Province of Ontario, the Canadian 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 Canada Business Corporations Act 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 and scholarship plan dealer in each province and territory in Canada
3. The Filer is the investment fund manager of the Funds.
4. Each of the Funds was established as an open-end unit trust under the laws of Ontario pursuant to separate supplemental trust agreements between the Filer and RBC Investor Services Trust (the Trustee) each dated as of October 1, 2021, each of which incorporates the terms and conditions of a master trust agreement dated August 24, 2021 between the Filer and the Trustee.
5. Each of the Funds is a reporting issuer in each of the Canadian Jurisdictions.
6. Neither the Filer nor any of the Funds are in default of securities legislation in any of the Canadian Jurisdictions.
7. The units of each Fund are currently distributed to the public in the Canadian Jurisdictions pursuant to the Current Prospectus dated November 2, 2021 which is the first simplified prospectus of the Funds.
8. Pursuant to subsection 62(1) of the Securities Act (Ontario) (the Act), the lapse date for the Current Prospectus is November 2, 2022 (the Lapse Date).
9. Under subsection 62(2) of the Act, the distribution of securities of the Funds would have to cease on the Lapse Date unless: (i) the Funds file a proforma simplified prospectus at least 30 days prior to the Lapse Date; (ii) the final simplified prospectus is filed no later than 10 days after the Lapse Date; and (iii) a receipt for the final simplified prospectus is obtained within 20 days after the Lapse Date.
10. The Funds filed a proforma simplified prospectus on September 30, 2022, within the time limit prescribed under the Act.
11. The Filer is also the investment fund manager of the CST Spark 2041 Education Portfolio (the "2041 Fund").
12. The 2041 Fund was established as an open-end unit trust under the laws of Ontario pursuant to a supplemental trust agreement between the Filer and the Trustee dated December 13, 2021, which incorporates the terms and conditions of a master trust agreement dated August 24, 2021 between the Filer and the Trustee.
13. The 2041 Fund is a mutual fund that is subject to the provisions of NI 81-102 and is a reporting issuer in each of the Canadian Jurisdictions.
14. The units of the 2041 Fund are currently distributed to the public in the Canadian Jurisdictions pursuant to a simplified prospectus dated January 5, 2022 (the 2041 Fund Prospectus), having a lapse date of January 5, 2023.
15. The Filer wishes to combine the Current Prospectus with the 2041 Fund Prospectus to reduce renewal, printing and related costs of the Funds and the 2041 Fund.
16. Offering the Funds and the 2041 Fund under one simplified prospectus would facilitate the distribution of units of the Funds and the 2041 Fund in the Canadian Jurisdictions under the same prospectus and enable the Filer to streamline disclosure across the Filer's fund platform. The Funds and the 2041 Fund share many common operational and administrative features and combining them under one prospectus will allow investors to more easily compare the features of the Funds and the 2041 Fund.
17. Absent the Requested Relief being granted, it will be necessary to renew the Current Prospectus twice within a short period of time in order to consolidate the Current Prospectus with the 2041 Fund Prospectus.
18. There have been no material changes in the affairs of the Funds since the filing of the Current Prospectus. Accordingly, the Current Prospectus represents current information regarding the Funds.
19. Given the disclosure obligations of the Funds, should a material change in the affairs of the Funds occur, the Current Prospectus will be amended as required under the Legislation.
20. New investors in the Funds will receive delivery of the most recently filed fund facts documents of the Funds. The Current Prospectus will still be available upon request.
21. The Requested Relief will not affect the currency or accuracy of the information contained in the Current Prospectus and therefore will 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.
"Darren McKall"
Manager, Investment Funds and Structured Products
Ontario Securities Commission
Application File #: 2022/0478