Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief granted to mutual funds for extension of lapse date of prospectus for 53 days – Lapse date extended to after completion of acquisition and amalgamation of the manager – Extension of lapse date will not affect the currency or accuracy of the information contained in the prospectus – Securities Act (Ontario).
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as amended, s. 62(5).
January 5, 2010
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 Meritas Financial Inc. (the “Filer”)
and
In the Matter of Meritas Money Market Fund,
Meritas Canadian Bond Fund,
Meritas Balanced Portfolio Fund,
Meritas Monthly Dividend and Income Fund,
Meritas Jantzi Social Index® Fund,
Meritas U.S. Equity Fund and Meritas International Equity Fund
(collectively, the “Funds”)
DECISION
Background
The securities regulatory authority or regulator in Ontario (the “Decision Maker”) has received an application from the Filer on behalf of the Funds for a decision under the securities legislation of the Jurisdiction (the “Legislation”) that the time limits for the renewal of the simplified prospectus and annual information form of the Funds dated February 6, 2009 (the “Prospectus”) be extended to those time limits that would be applicable if the lapse date of the Prospectus was March 31, 2010 (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 (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Nunavut and Yukon.
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 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 and the Funds:
The Filer is the manager of the Funds, with its head office located in Kitchener, Ontario. The Filer and the Funds are not in default of any of the requirements of the Legislation.
The Funds are open-ended mutual funds and are reporting issuers under the Legislation. Securities of the Funds are currently qualified for distribution in each of the provinces and territories of Canada under the Prospectus, as amended.
The lapse date for the distribution of securities of the Funds under the Prospectus is February 6, 2010 (the “Lapse Date”).
Pursuant to the Legislation, provided a pro forma simplified prospectus is filed not less than 30 days before February 6, 2010, a final simplified prospectus is filed by February 16, 2010, and a receipt for the final simplified prospectus is issued by the securities regulatory authorities by February 26, 2010, the securities of the Funds may be distributed after the Lapse Date during this prospectus renewal period.
On December 2, 2009, the Filer announced by press release the signing of a definitive agreement for the acquisition by Qtrade Canada Inc. (“Qtrade”) of all of the issued and outstanding shares of the Filer subject to regulatory approvals and other conditions as set out in the agreement. A corresponding material change report and amendments to the Prospectus and annual information form of the Funds were filed on SEDAR. It is contemplated that the share sale and acquisition will close on March 31, 2010 and will be followed by the amalgamation of the Filer with two other wholly-owned subsidiaries of Qtrade, Qtrade Fund Management Inc. and OceanRock Capital Partners Inc. The combined entity will continue under the name Qtrade Fund Management Inc.
The acquisition and amalgamation (together, the “Transaction”) will be effected in accordance with applicable requirements of the Legislation, including National Instrument 81-102 Mutual Funds, National Instrument 81-106 Investment Fund Continuous Disclosure and National Instrument 31-103 Registration Requirements and Exemptions.
In order to reduce the cost of renewing the Prospectus in February and then subsequently amending and restating the Prospectus in April following the proposed Transaction, the Filer wishes to extend the Lapse Date to March 31, 2010 so that the renewal simplified prospectus can be filed by April 10, 2010, following completion of the proposed Transaction.
If the Exemption Sought is not granted, the Legislation requires that the Funds file the renewal simplified prospectus by February 16, 2010, within 43 days of the proposed Transaction. Requiring the Funds to file a renewal simplified prospectus and then amend the renewal simplified prospectus within such a short period of time would lead to increased costs borne by the Funds (and ultimately by investors in the Funds).
Since February 6, 2009, the date of the Prospectus, there have been no material changes in respect of the Funds other than those for which amendments to the Prospectus have been filed. Accordingly, the Prospectus contains all material facts regarding the Funds.
The extension requested will not affect the currency or accuracy of the information contained in the Prospectus, as amended, and, accordingly, will not be prejudicial to the public interest.
Decision
The Decision Maker 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 Maker under the Legislation is that the Exemption Sought is granted.
“Darren McKall”
Darren McKall
Assistant Manager, Investment Funds
Ontario Securities Commission
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief granted to mutual funds for extension of lapse date of prospectus for 53 days – Lapse date extended to after completion of acquisition and amalgamation of the manager – Extension of lapse date will not affect the currency or accuracy of the information contained in the prospectus – Securities Act (Ontario).
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as amended, s. 62(5).