Desjardins Investments Inc.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted from National Instrument 81-101 Mutual Fund Prospectus Disclosure to combine the simplified prospectus of an alternative mutual fund with the simplified prospectus of a conventional mutual fund.
Applicable Legislative Provisions
National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 5.1(4) and 6.1(1).
TRANSLATION
October 21, 2021
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 DESJARDINS INVESTMENTS INC. (the Filer) AND DESJARDINS ALT LONG/SHORT EQUITY MARKET NEUTRAL ETF FUND (the Existing Alternative Fund) AND THE ALTERNATIVE MUTUAL FUNDS ESTABLISHED IN THE FUTURE AND MANAGED BY THE FILER OR AN AFFILIATE OF THE FILER (the Future Alternative Funds, and together with the Existing Alternative Fund, the Alternative Funds)
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Makers) has received an application from the Filer on behalf of the Alternative Funds for a decision under the securities legislation of the Jurisdictions (the Legislation), pursuant to section 6.1 of Regulation 81-101 respecting Mutual Fund Prospectus Disclosure, CQLR, c. V-1.1, r. 38 (Regulation 81-101) that grants relief to the Alternative Funds from the requirement in subsection 5.1(4) of Regulation 81-101 which states that a simplified prospectus (SP) for an alternative mutual fund must not be consolidated with a SP of another mutual fund if the other mutual fund is not an alternative mutual fund in order to permit SP(s) for one or more Alternative Funds to be consolidated with the SP(s) of one or more mutual funds existing today or created in the future (i) that are reporting issuers to which Regulation 81-101 and Regulation 81-102 respecting Investment Funds, CQLR, c. V-1.1, r. 39 (Regulation 81-102) apply, (ii) that are not alternative mutual funds, and (iii) for which the Filer, or an affiliate of the Filer, acts or will act as the investment fund manager (the Conventional Funds, and together with the Alternative Funds, the Funds) (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, CQLR, c. V-1.1, r. 1 (Regulation 11-102) is intended to be relied upon in the provinces and territories of Canada other than the Jurisdictions (together with Québec and Ontario, the Canadian 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 81-101, Regulation 81-102, Regulation 14-101 respecting Definitions, CQLR, c. V-1.1, r. 3, and Regulation 11-102.
Representations
This decision is based on the following facts represented by the Filer:
The Filer
1. The Filer is a corporation incorporated under the Business Corporations Act (RSQ, c. S-31.1) of Québec.
2. The Filer, or an affiliate of the Filer, is or will be, the investment fund manager of each Fund.
3. The Filer is registered as an investment fund manager in Québec, Ontario and Newfoundland and Labrador.
4. The head office of the Filer is in Montreal, Québec.
5. The Filer is not in default of the securities legislation in any of the Canadian Jurisdictions.
The Funds
6. Each Alternative Fund is, or will be, established under the laws of Québec or Canada as a mutual fund that is a trust or a class of shares of a mutual fund corporation and is, or will be, a reporting issuer in one or more of the Canadian Jurisdictions.
7. Each Conventional Fund is not, or will not be, an alternative mutual fund.
8. The Existing Alternative Fund is not in default of the securities legislation in any of the Canadian Jurisdictions.
9. The securities of each Fund are, or will be, qualified for distribution in one or more of the Canadian Jurisdictions using a SP, annual information form (AIF) and fund facts prepared and filed in accordance with the securities legislation of such Canadian Jurisdictions.
10. The Filer wishes to combine the SP(s) for one or more Alternative Funds with the SP(s) of one or more Conventional Funds in order to reduce renewal, printing and related costs. Offering the Alternative Funds using the same SP and AIF as the Conventional Funds would facilitate the distribution of the Alternative Funds in the Canadian Jurisdictions under the same prospectus disclosure and enable the Filer to streamline disclosure across the Filer's fund platform.
11. Even though the Alternative Funds are, or will be, alternative mutual funds, they share, or will share, many common operational and administrative features with the Conventional Funds and combining them in the same SP will allow investors to more easily compare the features of the Alternative Funds and the Conventional Funds.
12. The Filer may make changes to the features of the Funds as part of the process of renewing the Conventional Funds' SP. The ability to file the SP of the Alternative Funds with those of the Conventional Funds will ensure that the Filer can make the operational and administrative features of the Alternative Funds and the Conventional Funds consistent with each other, as appropriate
13. Investors will continue to receive the fund facts documents when purchasing securities of the Alternative Funds or Conventional Funds as required by applicable securities legislation. The form and content of the fund facts of the Alternative Funds and Conventional Funds will not change as a result of the Exemption Sought. The SP and/or AIF of the Alternative Funds and Conventional Funds will continue to be provided to investors, upon request, as required by applicable securities legislation.
14. The Filer is of the view that the Exemption Sought is not prejudicial to the public interest and is in the best interests of the Alternative Funds and their securityholders.
15. Regulation 41-101 respecting General Prospectus Requirements, CQLR, c. V-1.1, r. 14 (Regulation 41-101) does not contain a provision equivalent to subsection 5.1(4) of Regulation 81-101. Accordingly, an investment fund manager that manages exchange-traded funds (ETFs) is permitted to consolidate a prospectus under Regulation 41-101 for its ETFs that are alternative mutual funds with a prospectus for its ETFs that are conventional mutual funds. There is no reason why mutual funds filing a prospectus under Regulation 81-101 should be treated differently from ETFs filing a prospectus under Regulation 41-101.
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.