Horizons ETFS Management (Canada) Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- technical relief from National Instrument 62-104 Take-Over Bids and Issuer Bids issuer bid requirements for corporate class ETFs to acquire securities of the same mutual fund corporation from a public marketplace in accordance with fund-of-fund rules -- subject to conditions.

Applicable Legislative Provisions

National Instrument 62-104 Take-Over Bids and Issuer Bids, Part 2 and s. 6.1.

April 20, 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 HORIZONS ETFS MANAGEMENT (CANADA) INC. (the Filer) AND THE EXCHANGE TRADED FUNDS LISTED IN SCHEDULE A (the Existing Horizons Corporate Class ETFs)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of Horizons ETF Corp. (Horizons MFC), the Existing Horizons Corporate Class ETFs and any such other exchange traded funds represented by a separate class of shares of Horizons MFC that may be created in the future (the Future Horizons Corporate Class ETFs, and together with the Existing Horizons Corporate Class ETFs, the Horizons Corporate Class ETFs) for a decision under the securities legislation of the Jurisdiction (the Legislation) that the acquisition, through the facilities of the Toronto Stock Exchange (TSX) or other Marketplace (as defined below), by Horizons MFC (or by the Filer on behalf of Horizons MFC) of shares of Horizons MFC representing one Horizons Corporate Class ETF for purposes of adding such acquired shares to the investment portfolio of a different Horizons Corporate Class ETF is exempt from the requirements of Part 2 of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104) (the Formal Issuer Bid Requirements, and such exemption, 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 section 4.7(1)(c) of Multilateral Instrument 11 102 Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than the Jurisdiction (together with the Jurisdiction, the Canadian Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions (NI 14-101), MI 11-102 and NI 62-104 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 existing under the laws of Canada, with its head office located in Toronto, Ontario.

1. The Filer is a wholly-owned subsidiary of Mirae Asset Global Investments Co., Ltd.

2. The Filer is registered as (a) an investment fund manager in Newfoundland and Labrador, Ontario and Québec, (b) a portfolio manager in Alberta, British Columbia, Ontario and Québec (c) a dealer in the category of exempt market dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan, (d) a commodity trading adviser in Ontario and (e) a commodity trading manager in Ontario.

3. Horizons MFC is a mutual fund corporation established under the laws of Canada, with its head office located in Toronto, Ontario.

4. The authorized capital of Horizons MFC includes an unlimited number of non-cumulative, redeemable, non-voting classes of shares (each, a Corporate Class) issuable in an unlimited number of series, and one class of voting shares.

5. Each Existing Horizons Corporate Class ETF is, and each Future Horizons Corporate Class ETF will be, represented by a separate Corporate Class of shares consisting of one or more series of shares.

6. Securities of the Existing Horizons Corporate Class ETFs are, and each Future Horizons Corporate Class ETFs are expected to be, distributed in each of the Canadian Jurisdictions under long form prospectuses and ETF facts documents prepared in accordance with the requirements of National Instrument 41-101 General Prospectus Requirements and National Instrument 81-102 Investment Funds (NI 81-102), as applicable.

7. Each Existing Horizons Corporate Class ETF is, and each Future Horizons Corporate Class ETF is expected to be, considered under subsection 1.3(1) of NI 81-102 to be a separate investment fund for the purposes of NI 81-102 in the Canadian Jurisdictions, each being referable to a separate portfolio of assets with its own investment objectives and strategies to achieve such objectives.

8. Each Existing Horizons Corporate Class ETF is, and each Future Horizons Corporate Class ETF is expected to be, a separate reporting issuer under the applicable securities legislation of each of the Canadian Jurisdictions.

9. Each Existing Horizons Corporate Class ETF is currently listed separately on the TSX.

10. Each Future Horizons Corporate Class ETF is expected to be listed separately on the TSX or another "marketplace", as defined in National Instrument 21-101 Marketplace Operations, that is located in Canada (a Marketplace).

11. The Existing Horizons Corporate Class ETFs are, and the Future Horizons Corporate Class ETFs will be, subject to, among other laws and regulations governing exchange traded mutual funds, NI 81-102, National Instrument 81-106 Investment Fund Continuous Disclosure and National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107).

12. The Filer and the Existing Horizons Corporate Class ETFs are not in default of applicable securities legislation in any of the Canadian Jurisdictions.

13. As part of seeking to achieve a particular Horizons Corporate Class ETF's investment objectives and strategies, it may be prudent, more efficient, less costly or otherwise in the best interests of the securityholders of the Horizons Corporate Class ETF, for that Horizons Corporate Class ETF to purchase shares of Horizons MFC representing one or more other distinct Horizons Corporate Class ETFs for its investment portfolio from third parties in the normal course through the facilities of the TSX or another Marketplace.

14. As a result of each Horizons Corporate Class ETF being structured as a separate class of shares of Horizons MFC, an offer by Horizons MFC (or by the Filer on behalf of Horizons MFC) over the TSX or other Marketplace on behalf of one Horizons Corporate Class ETF to acquire outstanding shares of a Corporate Class representing a different Horizons Corporate Class ETF from a third party to include in the investment portfolio of the first Horizons Corporate Class ETF could trigger the Formal Issuer Bid Requirements because Horizons MFC could technically be acquiring its own equity securities from a third party located in Canada for valuable consideration in a transaction that does not require approval of Horizons MFC's securityholders.

15. Section 2.5 of NI 81-102 and section 6.2 of NI 81-107 (collectively, the Fund of Funds Rules) allow for one investment fund to acquire and own securities in another investment fund managed by the same investment fund manager, subject to certain restrictions.

16. Certain of the Existing Horizons Corporate Class ETFs were previously structured as separate trusts prior to being reorganized into their current corporate class structure. When such Existing Horizons Corporate Class ETFs were structured as separate trusts, they were permitted to invest in each other's securities without triggering the Issuer Bid Requirements, so long as they complied with the established Fund of Funds Rules, because they were separate legal entities. The Exemption Sought would permit the Horizons Corporate Class ETFs to do what they were otherwise already permitted to do prior to the above-mentioned reorganization.

17. The Filer and Horizons MFC acknowledge and agree that any acquisition of shares of a Corporate Class by or on behalf of Horizons MFC will be made only in accordance with the Fund of Funds Rules.

18. Horizons MFC acquiring shares of one Horizons Corporate Class ETF for investment purposes on behalf of another Horizons Corporate Class ETF will not affect control of Horizons MFC or any of the Horizons Corporate Class ETFs, since the Corporate Class shares of Horizons MFC representing each Horizons Corporate Class ETF are non-voting shares.

19. All applicable acquisitions will be made in the secondary market through the facilities of the TSX or other applicable Marketplace at prevailing market prices. The pricing for each Horizons Corporate Class ETF will generally reflect its net asset value. No premium will be paid.

20. Any shares of a Corporate Class acquired for the investment portfolio of a Horizons Corporate Class ETF will not be cancelled upon acquisition, and will remain as outstanding securities of Horizons MFC held on behalf of the investing Horizons Corporate Class ETF's investors.

21. By allowing a Horizons Corporate Class ETF to acquire Corporate Class shares of one or more other Horizons Corporate Class ETFs for its investment portfolio, it may permit the Filer to manage the Horizons Corporate Class ETFs in a manner that is more cost effective, operationally efficient and in the best interests of the securityholders of the Horizons Corporate Class ETF.

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, provided that:

(a) any acquisition of shares of a Corporate Class by or on behalf of Horizons MFC will be made in accordance with the Fund of Funds Rules;

(b) any acquisition of shares of a Corporate Class by or on behalf of Horizons MFC will be made in the secondary market through the facilities of the TSX or other applicable Marketplace at prevailing market prices; and

(c) any shares of a Corporate Class acquired for the investment portfolio of a Horizons Corporate Class ETF will not be cancelled upon acquisition, and will remain as outstanding securities of Horizons MFC held on behalf of the investing Horizons Corporate Class ETF's investors.

SCHEDULE A

Existing Horizons Corporate Class ETFs