IA Clarington Investments Inc. et al.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted to mutual funds for extension of lapse dates of their prospectuses for 70 and 73 days respectively -- Filer will incorporate offerings of the mutual funds 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 prospectuses.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).
[TRANSLATION]
February 24, 2017
IN THE MATTER OF THE SECURITIES LEGISLATION OF QUEBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF IA CLARINGTON INVESTMENTS INC. (the Filer) AND IA CLARINGTON CONSERVATIVE PORTFOLIO, IA CLARINGTON MODERATE PORTFOLIO, IA CLARINGTON BALANCED PORTFOLIO, IA CLARINGTON GROWTH PORTFOLIO, IA CLARINGTON MAXIMUM GROWTH PORTFOLIO, IA CLARINGTON GLOBAL EQUITY EXPOSURE FUND (the Funds)
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application from the Filer on behalf of the Funds for a decision under the securities legislation of the Jurisdictions (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 June 20, 2017 (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Autorite des marches financiers is the principal regulator for this application;
(b) the Filer has provided notice that subsection 4.7(1) of Regulation 11-102 Passport System (Regulation 11-102) is intended to be relied upon in each of the provinces and territories of Canada other than the 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 14-101 respecting Definitions and Regulation 11-102 have the same meaning if used in this decision, unless otherwise defined. Capitalized terms used in this decision have the following meanings:
IA Clarington Managed Portfolios means IA Clarington Conservative Portfolio, IA Clarington Moderate Portfolio, IA Clarington Balanced Portfolio, IA Clarington Growth Portfolio and IA Clarington Maximum Growth Portfolio
GEE Fund means IA Clarington Global Equity Exposure Fund
Representations
This decision is based on the following facts represented by the Filer:
The Filer
1. The Filer is a corporation amalgamated under the laws of Canada. The Filer's head office is in Quebec City, Quebec.
2. The Filer is registered as an investment fund manager in Quebec, Ontario and Newfoundland and Labrador, as an exempt market dealer in Quebec and Ontario, and as a portfolio manager in all of the provinces of Canada.
3. The Filer is the trustee and manager of the Funds. The Filer is also the trustee and manager of sixty (60) other IA Clarington mutual funds (the IA Clarington Funds) that are offered in each of the jurisdictions of Canada under a simplified prospectus dated June 20, 2016, as amended by amendment no. 1 dated December 13, 2016, the lapse date of which is June 20, 2017, as well as the three (3) Target Click funds (the Target Click Funds, and together with the IA Clarington Funds, the Other Funds) that are offered in each of the jurisdictions of Canada under a simplified prospectus dated June 20, 2016.
4. Neither the Funds nor the Filer is in default of securities legislation in any of the jurisdictions of Canada.
The IA Clarington Managed Portfolios
5. Each of, the IA Clarington Managed Portfolios is an open-ended mutual fund trust established under the laws of Ontario. Each of the IA Clarington Managed Portfolios is a reporting issuer in each of the jurisdictions of Canada.
6. Units of the IA Clarington Managed Portfolios are currently qualified for distribution in each of the jurisdictions of Canada under the current simplified prospectus of the IA Clarington Managed Portfolios dated April 11, 2016 (the Portfolios Current Prospectus).
7. The lapse date for the Portfolios Current Prospectus is April 11, 2017 (the Portfolios Current Lapse Date). Accordingly, under section 2.5(7) of Regulation 81-101 respecting Mutual Fund Prospectus Disclosure (Regulation 81-101) and section 62(5) of the Securities Act (Ontario) (the Act), the distribution of units of the IA Clarington Managed Portfolios would have to cease on the Portfolios Current Lapse Date unless (i) a pro-forma simplified prospectus is filed at least 30 days prior to the Portfolios Current Lapse Date, i.e. by March 12, 2017; (ii) a final simplified prospectus is filed no later than 10 days after the Portfolios Current Lapse Date, i.e. by April 21, 2017; and (iii) a receipt for the final simplified prospectus is obtained within 20 days of the Portfolios Current Lapse Date, i.e. by May 1, 2017.
8. The IA Clarington Managed Portfolios were newly created in 2016 and have not yet provided investors with any audited financial information.
The GEE Fund
9. The GEE Fund is an open-ended mutual fund trust established under the laws of Ontario. The GEE Fund is a reporting issuer in each of the jurisdictions of Canada.
10. Units of the GEE Fund are currently qualified for distribution in each of the jurisdictions of Canada under the current simplified prospectus of the GEE Fund dated April 8, 2016 (the GEEF Current Prospectus and together with the Portfolios Current Prospectus, the Current Prospectus).
11. The lapse date for the GEEF Current Prospectus is April 8, 2017 (the GEEF Current Lapse Date and together with the Portfolios Current Lapse Date, the Current Lapse Dates). Accordingly, under section 2.5(7) of Regulation 81-101 and section 62(5) of the Act, the distribution of units of the GEE Fund would have to cease on the GEEF Current Lapse Date unless (i) a pro-forma simplified prospectus is filed at least 30 days prior to the GEEF Current Lapse Date, i.e. by March 9, 2017; (ii) a final simplified prospectus is filed no later than 10 days after the GEEF Current Lapse Date, i.e. by April 18, 2017; and (iii) a receipt for the final simplified prospectus is obtained within 20 days of the GEEF Current Lapse Date, i.e. by April 28, 2017.
Renewal Filings
12. The Filer must file annual financial statements and the management report of fund performance (MRFP) for the Funds and the Other Funds for the financial year ended March 31, 2017 by no later than June 30, 2017, which date is after the Current Lapse Dates.
13. The Filer wishes to combine the simplified prospectus of the IA Clarington Managed Portfolios with the simplified prospectus of the IA Clarington Funds, and to combine the simplified prospectus of the GEE Fund with the simplified prospectus of the Target Click Funds. Offering the IA Clarington Managed Portfolios under the same renewal simplified prospectus, annual information form and fund facts (the Prospectus Documents) as the IA Clarington Funds, and offering the GEE Fund under the same Prospectus Documents as the Target Click Funds, would facilitate the distribution of the Funds in the jurisdictions of Canada under the same prospectus disclosure and would also assist in disseminating information with respect to the Funds and the Other Funds in such matters such as switching between the Fund and the Other Funds. The Funds share many common operational and administrative features with the Other Funds and combining them in the same simplified prospectuses will allow investors to more easily compare the features of the Other Funds and the Funds.
14. It would be impractical to alter and modify all the dedicated systems, procedures and resources required to prepare the Prospectus Documents of the Other Funds, and unreasonable to incur the costs and expenses associated therewith, so that the Prospectus Documents of the Other Funds can be filed earlier with the Prospectus Documents of the Funds. Moreover, it would result in the Other Funds not being able to incorporate current audited financial information in their Prospectus Documents.
15. The Filer may make minor changes to the features of the Other Funds as part of the process of renewing the Other Funds' Prospectus Documents in June 2017. The ability to file the Prospectus Documents of the Funds with those 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.
16. As the financial year end of the Funds is March 31, the Funds will need to incorporate by reference unaudited interim financial information (as at September 30, 2016) into the Prospectus Documents under the Current Lapse Dates. In order to incorporate by reference the interim unaudited financial statements into the Prospectus Documents, those interim unaudited financial statements must have been reviewed by the Funds' auditor in accordance with the relevant standards set out in the Handbook of the Canadian Institute of Chartered Accountants for a review of financial statements. Given that the audited financial statements of the Funds will be available no later than June 30, 2017, which is only a few weeks following the filing of the Prospectus Documents under the Current Lapse Dates, this review of the interim unaudited financial statements will incur time and expense which will only be relevant for a short period of time.
17. Moving the Current Lapse Dates of the Current Prospectus until June 20, 2017 will allow the Filer to finalize and file the audited financial statements and MRFP of the Funds before June 30, 2017 and then complete the task of updating the data in the relevant Prospectus Documents to file the final simplified prospectus shortly following the filing of the audited financial statements and MRFP of the Funds.
18. Once the Prospectus Documents of the Funds and the Other Funds are consolidated, the Funds will be able to renew their Prospectus Documents on a timeline that allows them to include the most current audited financial information in the Prospectus Documents each year. If the Exemption Sought is granted, investors in the Funds would have the benefit of being provided with the Funds' most current audited financial information and financial reporting when reviewing the Prospectus Documents.
19. There have been no material changes in the affairs of the Funds since the dates of the Current Prospectus. Accordingly, the Current Prospectus, together with the annual information form and fund facts continues to provide accurate information regarding the Funds.
20. The Exemption Sought will not affect the accuracy of the information contained in the Current Prospectus and will therefore not be prejudicial to the public interest.
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 is granted.