Guardian Capital LP
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from subsection 62(5) of the Securities Act granting an extension of the lapse date of two prospectuses so that funds qualified for distribution by the two prospectuses be incorporated into a third prospectus when it is renewed -- relief granted from subsection 5.1(4) of NI 81-101 to permit simplified prospectus of alternative mutual funds to be consolidated with simplified prospectus of mutual funds that are not alternative mutual funds.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).
National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 5.1(4) and 6.1.
October 19, 2021
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 GUARDIAN CAPITAL LP (the Filer)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of GC One Equity Portfolio and GC One Fixed Income Portfolio (collectively, the GC One Portfolios) and Guardian Strategic Income Fund (the Current Alternative Fund and, together with the GC One Portfolios, the Funds) and any alternative mutual fund established or restructured in the future and managed by the Filer or an affiliate of the Filer (collectively with the Current Alternative Fund, the Alternative Funds) for a decision under the securities legislation of the Jurisdiction (the Legislation) that:
(a) the time limits for the renewal of each simplified prospectus, fund facts document and annual information form of the Funds (each, a Current Prospectus) be extended to those time limits that would apply if the lapse date was April 21, 2022 (the Lapse Date Extension); and
(b) grants relief to the Alternative Funds from the requirement in subsection 5.1(4) of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) that states that a simplified prospectus for an alternative mutual fund must not be consolidated with a simplified prospectus of another mutual fund if the other mutual fund is not an alternative mutual fund (the Simplified Prospectus Consolidation and, together with the Lapse Date Extension, the Exemption Sought).
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, with respect to the Lapse Date Extension, 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 except Québec (the Other Jurisdictions and together with Ontario, the Canadian Jurisdictions) and, with respect to the Simplified Prospectus Consolidation, subsection 4.7(1) of MI 11-102 is intended to be relied upon in each of the Other Jurisdictions and Québec.
Interpretation
Terms defined in National Instrument 14-101 Definitions, MI 11-102, and National Instrument 81-102 Investment Funds (NI 81-102) 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:
The Filer
1. The Filer is a limited partnership formed under the laws of Ontario with its head office located in Toronto, Ontario.
2. The Filer is registered as an investment fund manager in each of the Provinces of Ontario, Québec and Newfoundland and Labrador, as a portfolio manager and an exempt market dealer in each of the Provinces of Canada, and as a commodity trading manager and a commodity trading counsel in the Province of Ontario.
3. The Filer is the trustee and investment fund manager of each of the Funds.
4. The Filer is also the trustee and investment fund manager of the mutual funds listed in Schedule A (the Other Funds), which are offered in each of the Canadian Jurisdictions and in Québec under a simplified prospectus dated April 21, 2021 (the Other Funds Prospectus) and so have a lapse date of April 21, 2022.
5. Neither the Filer nor any of the Funds is in default of securities legislation in any of the Canadian Jurisdictions.
The Funds
6. Each of the Funds is an open-ended mutual fund trust established under the laws of Ontario. Each of the Funds is a reporting issuer in each of the Canadian Jurisdictions.
7. Securities of the GC One Portfolios are currently qualified for distribution in each of the Canadian Jurisdictions under the current simplified prospectus of the GC One Portfolios dated November 26, 2020 (the GC One Prospectus).
8. Securities of the Current Alternative Fund are currently qualified for distribution in each of the Canadian Jurisdictions under the current simplified prospectus of the Current Alternative Fund dated December 23, 2020 (the Alternative Fund Prospectus and together with the GC One Prospectus the Current Prospectuses).
9. Pursuant to subsection 62(1) of the Act, the lapse date for the GC One Prospectus is November 26, 2021 (the GC One Prospectus Lapse Date) and the lapse date for the Alternative Fund Prospectus is December 23, 2021 (the Alternative Fund Prospectus Lapse Date and, together with the GC One Prospectus Lapse Date, the Current Lapse Dates). Accordingly, under subsection 62(1) of the Securities Act (Ontario) (the Act), the distribution of securities of each Fund would have to cease on its respective Current Lapse Date unless: (i) the Fund files a pro forma simplified prospectus at least 30 days prior to its respective Current Lapse Date; (ii) the Fund files a final simplified prospectus no later than 10 days after its respective Current Lapse Date; and (iii) a receipt for the final simplified prospectus is obtained by the Fund within 20 days after its respective Current Lapse Date.
Reasons for the Lapse Date Extension
10. The Filer wishes to combine each of the GC One Prospectus and the Alternative Fund Prospectus with the Other Funds Prospectus in order to reduce renewal, printing and related costs. Offering the Funds under the same renewal simplified prospectus and annual information form (the Prospectus Documents) as the Other Funds would facilitate the distribution of the Funds in the Canadian Jurisdictions under the same prospectus and enable the Filer to streamline disclosure across the Filer's fund platform.
11. Even though the Current Alternative Fund is an alternative mutual fund, the Funds share many common operational and administrative features with each other and with the Other Funds and combining them in the same simplified prospectus will allow investors to more easily compare the features of the Other Funds and the Funds.
12. If the Exemption Sought is granted, the Filer intends to qualify each of the Funds for distribution under the Other Funds Prospectus in Québec.
13. The Filer may make changes to the features of the Other Funds as part of the process of renewing the Other Funds Prospectus. The ability to combine the simplified prospectuses of the Funds with that of the Other Funds will ensure that the Filer can make the operational and administrative features of the Funds and the Other Funds consistent with each other, if necessary.
14. If the Lapse Date Extension is not granted, it will be necessary to renew each of the GC One Prospectus and the Alternative Fund Prospectus twice within a short period of time in order to consolidate the GC One Prospectus and the Alternative Fund Prospectus with the Other Funds Prospectus, and it would be unreasonable for the Filer to incur the costs and expenses associated therewith, given investors would not be prejudiced by the Lapse Date Extension.
15. There have been no material changes in the affairs of any of the Funds since the date of each Fund's respective Current Prospectus. Accordingly, the Current Prospectuses continue to provide accurate information regarding the Funds.
16. Given the disclosure obligations of the Filer and the Funds, should any material change in the business, operations or affairs of the Funds occur, the applicable Current Prospectus and related annual information form and fund facts document(s), as applicable, of the impacted Fund(s) will be amended as required under the Act.
17. New investors of the Funds will receive delivery of the most recently filed fund facts document(s) of the applicable Fund(s). The Current Prospectuses and related annual information forms of the Funds will remain available to investors upon request.
18. The Lapse Date Extension will not affect the accuracy of the information contained in the Current Prospectuses or the related annual information forms or fund facts document(s) of each of the Funds, and will therefore not be prejudicial to the public interest.
Reasons for the Simplified Prospectus Consolidation
19. The Filer wishes to combine the simplified prospectus and annual information form of the Alternative Funds with the simplified prospectus and annual information form of the mutual funds existing today or created in the future (i) that are reporting issuers to which NI 81-101 and NI 81-102 apply, (ii) that are not alternative mutual funds, and (iii) for which the Filer acts as the investment fund manager (the Conventional Mutual Funds), in order to reduce renewal, printing and related costs. Offering the Alternative Funds using the same simplified prospectus and annual information form as the majority of the mutual funds managed by the Filer would facilitate the distribution of the Alternative Funds in the Canadian Jurisdictions and Québec under the same prospectus disclosure and enable the Filer to streamline disclosure across the Filer's fund platform.
20. 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 Mutual Funds and combining them in the same simplified prospectus will allow investors to more easily compare the features of the Alternative Funds and the Conventional Mutual Funds.
21. Investors will continue to receive a fund facts document when purchasing securities of an Alternative Fund as required by applicable securities legislation. The form and content of the fund facts document of the Alternative Funds will not change as a result of the Simplified Prospectus Consolidation.
22. The simplified prospectus and annual information form of the Alternative Funds will continue to be provided to investors, upon request, as required by applicable securities legislation.
23. National Instrument 41-101 General Prospectus Requirements (NI 41-101) does not contain a provision equivalent to subsection 5.1(4) of NI 81-101. Accordingly, an investment fund manager that manages exchange-traded funds (ETFs) is permitted to consolidate a prospectus under NI 41-101 for its ETFs that are alternative mutual funds with a prospectus for its ETFs that are conventional mutual funds. The Filer submits that there is no reason why mutual funds filing a prospectus under NI 81-101 should be treated differently from ETFs filing a prospectus under NI 41-101.
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 Exemption Sought is granted.
"Darren McKall"
Manager, Investment Funds and Structured Products
Ontario Securities Commission
Application File #: 2021/0542
Schedule A
The Other Funds
Guardian Canadian Bond Fund
Guardian Canadian Equity Fund
Guardian Canadian Equity Income Fund
Guardian Canadian Equity Select Fund
Guardian Canadian Focused Equity Fund
Guardian Canadian Growth Equity Fund
Guardian Canadian Short-Term Investment Fund
Guardian Directed Equity Path Portfolio (formerly, Guardian SteadyPace Equity Fund)
Guardian Directed Premium Yield Portfolio (formerly, Guardian SteadyFlow Equity Fund)
Guardian Emerging Markets Equity Fund
Guardian Fixed Income Select Fund
Guardian Fundamental Global Equity Fund
Guardian High Yield Bond Fund
Guardian i3 Global Dividend Growth Fund (formerly, Guardian Global Dividend Growth Fund)
Guardian i3 Global Quality Growth Fund (formerly, Guardian Global Equity Fund)
Guardian i3 International Quality Growth Fund (formerly, Guardian International Equity Fund)
Guardian International Equity Select Fund
Guardian Investment Grade Corporate Bond Fund
Guardian Managed Balanced Portfolio (formerly, Guardian Balanced Fund)
Guardian Managed Growth Portfolio
Guardian Managed Income & Growth Portfolio
Guardian Managed Income Portfolio
Guardian Risk Managed Conservative Portfolio
Guardian Short Duration Bond Fund
Guardian U.S. Equity All Cap Growth Fund
Guardian U.S. Equity Fund
Guardian U.S. Equity Select Fund