RBC Global Asset Management Inc
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted 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
March 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 RBC GLOBAL ASSET MANAGEMENT INC. (RBCGAM), THE BLUEBAY GLOBAL ALTERNATIVE BOND FUND (Canada) AND THE ALTERNATIVE MUTUAL FUNDS ESTABLISHED OR RESTRUCTURED IN THE FUTURE AND MANAGED BY RBCGAM OR AN AFFILIATE (collectively with RBCGAM, the Filer) (collectively, the Alternative Funds)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Alternative Funds for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) granting relief to the Alternative Funds from the requirement in section 5.1(4) of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) 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, to permit the SP(s) for one or more Alternative Fund(s) to be consolidated with the SP(s) of one or more mutual fund(s) existing today or created in the future (i) that are reporting issuers to which NI 81-101 and National Instrument 81-102 Investment Funds (NI 81-102) apply, (ii) that are not alternative mutual funds, and (iii) for which the Filer acts as the investment fund manager (collectively, the RBC Mutual Funds, together with the Alternative Funds, the Funds) (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) of Multilateral Instrument 11-102 -- Passport System is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Nunavut and Yukon (together with the Jurisdiction, the Jurisdictions).
Interpretation
Terms defined in National Instrument 14-101 Definitions or NI 81-102, as applicable, 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 corporation formed by amalgamation pursuant to articles of amalgamation dated November 1, 2013 under the federal laws of Canada and its head office is located in Toronto, Ontario.
2. The Filer is an indirect, wholly-owned subsidiary of Royal Bank of Canada.
3. The Filer is registered as an adviser in the category of portfolio manager and as a dealer in the category of exempt market dealer under the securities legislation of each Jurisdiction, is registered as an investment fund manager in each of British Columbia, Ontario, Québec and Newfoundland and Labrador and is also registered in Ontario as a commodity trading manager.
4. The Filer is, or will be, the investment fund manager of the Funds.
5. RBCGAM is not in default of any of its obligations under the securities legislation of any Jurisdiction.
The Funds
6. Each Alternative Fund is, or will be, an alternative mutual fund established under the laws of the Province of Ontario or the laws of another Jurisdiction.
7. Each RBC Mutual Fund is, or will be, a conventional mutual fund and is not, or will not be, an alternative mutual fund.
8. The Funds are, or will be, subject to NI 81-102, subject to any exemptions therefrom that have been, or may be, granted by the securities regulatory authorities.
9. The securities of each Fund are, or will be, offered by a SP and annual information form (AIF) prepared in accordance with NI 81-101 and filed in one or more Jurisdictions. Accordingly, each Fund is, or will be, a reporting issuer in one or more Jurisdictions.
10. The BlueBay Global Alternative Bond Fund (Canada) is not in default of any of its obligations under the securities legislation of the Jurisdictions.
Reasons for the Exemption Sought
11. The Filer wishes to be able to consolidate the SP(s) and AIF(s) (collectively, the SP Documents) for one or more Alternative Funds with the SP Documents of one or more RBC Mutual Funds to reduce renewal, printing and related costs. Offering the Alternative Funds under the same SP Documents as the RBC Mutual Funds would facilitate the distribution of the Alternative Funds in the Jurisdictions under the same prospectus disclosure and enable the Filer to streamline disclosure across the Filer's fund platform.
12. 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 RBC Mutual Funds and combining them in the same SP Documents will allow investors to more easily compare the features of the Alternative Funds and the RBC Mutual Funds.
13. The Filer may make changes to the features of the RBC Mutual Funds as part of the process of renewing the RBC Mutual Funds' SP Documents. The ability to file the SP Documents of the Alternative Funds with those of the RBC Mutual Funds will ensure that the Filer can make the operational and administrative features of the Alternative Funds and the RBC Mutual Funds consistent with each other, as appropriate.
14. 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 Exemption Sought.
15. The SP and/or AIF of the Alternative Funds will continue to be provided to investors, upon request, as required by applicable securities legislation.
16. National Instrument 41-101 General Prospectus Requirements (NI 41-101) does not contain a provision which is 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.
17. 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.
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 is that the Exemption Sought is granted.