Headnote
NP 11-203 – Extension of lapse date of prospectus of mutual funds. – Due to inadvertence, the mutual funds failed to comply with the time lines for a renewal of a prospectus under the Legislation which caused the prospectus to lapse. – Mutual funds will not issue any units under the prospectus in a jurisdiction after the lapse date of the prospectus in that jurisdiction until the extension is granted.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c.S.5 as am., s. 62(5).
June 6, 2012
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 FIRST ASSET INVESTMENT MANAGEMENT INC. (the Filer)
AND
IN THE MATTER OF FIRST ASSET CAN-60 COVERED CALL ETF FIRST ASSET CAN-FINANCIALS COVERED CALL ETF FIRST ASSET CAN-ENERGY COVERED CALL ETF FIRST ASSET CAN-MATERIALS COVERED CALL ETF FIRST ASSET TECH GIANTS COVERED CALL ETF (the COVERED CALL ETFs) FIRST ASSET CANADIAN CONVERTIBLE BOND ETF (the CONVERTIBLE ETF, together with the COVERED CALL ETFs, the ETFs)
DECISION
Background
The principal regulator in the Jurisdiction (Decision Maker) has received an application from the Filer on behalf of the ETFs for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption under National Instrument 81-102 – Mutual Funds (NI 81-102) that the time limits for the renewal of the Prospectuses (as defined below) be extended to those time limits that would be applicable if the lapse date of the Prospectuses was May 29, 2012 (the Requested Relief).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (OSC) is the principal regulator for the application herein;
(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, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Nunavut and Yukon (the Passport Jurisdictions); and
(c) the decision is the decision of the principal regulator and evidence the decision of the Decision Makers.
Interpretation
Terms defined in National Instrument 14-101 – Definitions, MI 11-102 and NI 81-102 have the same meaning if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts as represented by the Filer and the ETFs:
The Filer is the manager of each of the ETFs.
The ETFs are each organized as mutual fund trusts within the meaning of the Legislation and similar legislation in each Passport Jurisdiction. The ETFs have each been established pursuant to a declaration of trust under the laws of Ontario and each ETF is a reporting issuer in the Province of Ontario and each Passport Jurisdiction.
Each Covered Call ETF currently distributes its securities in each of the Jurisdictions pursuant to a prospectus dated May 17, 2011 (the "Covered Call Prospectus"). The lapse date of the Covered Call Prospectus under the Legislation is May 17, 2012 (the "Lapse Date" of the Covered Call Prospectus), being the date which is 12 months from the date of the Covered Call Prospectus. Pursuant to the Legislation, the final renewal Covered Call Prospectus is due to be filed by May 27, 2012 and a receipt is required to be issued by the regulator by June 6, 2012.
The Convertible ETF currently distributes its securities in each of the Jurisdictions pursuant to a prospectus dated May 24, 2011 (the "Convertible Prospectus", and collectively, with the Covered Call Prospectus, the Prospectuses). The lapse date of the Convertible Prospectus under the Legislation is May 24, 2012 (the "Lapse Date" of the Convertible Prospectus), being the date which is 12 months from the date of the Convertible Prospectus. Pursuant to Legislation, the final renewal Convertible Prospectus is due to be filed by June 3, 2012 and a receipt is required to be issued by the regulator by June 13, 2012.
Neither the Filer nor the ETFs have not been noted in default of the Legislation.
Under the Legislation a distribution may continue under a prospectus for twelve months from the date of the last prospectus relating to the distribution or from the date of the receipt for the last prospectus relating to the distribution. The date to which a distribution may continue under a prospectus is the "lapse date". The distribution may be continued for a further twelve months if the provisions of the Legislation are complied with.
In order to qualify for the time lines stipulated for a renewal of a prospectus under the Legislation, it was necessary to file: (i) the final renewal Covered Call Prospectus no later than May 27, 2012, and a receipt is required to be issued by the regulator by June 6, 2012, and (ii) the final renewal Convertible Prospectus no later than June 3, 2012, and a receipt is required to be issued by the regulator by June 13, 2012
Due to inadvertence, the final renewal Covered Call Prospectus and the final renewal Convertible Prospectus was not filed until June 5, 2012, and did not qualify for the time lines for a renewal of a prospectus under the Legislation.
There has been no distribution of securities of any ETF since the respective Lapse Dates. The ETFs will not issue any units under a prospectus in a Jurisdiction until the Requested Relief is granted.
If the Requested Relief was not granted, it would be necessary to prepare and file a renewal prospectus in respect of the ETFs in order to re-qualify the distribution of ETFs.
There have been no material changes to the ETFs since the date of the Covered Call Prospectus or Convertible Prospectus. Accordingly, the Covered Call Prospectus and the Convertible Prospectus continues to provide accurate information regarding the ETFs. The requested extension will not affect the currency or the accuracy of the information contained in the Covered Call Prospectus and Convertible Prospectus, and therefore will not be prejudicial to the public interest.
The Manager, and not the ETFs, will bear any expenses relating to the application in respect of this decision document.
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.
"Darren McKall"
______________________________
Darren McKall Manager, Investment Funds Branch Ontario Securities Commission
Headnote
NP 11-203 – Extension of lapse date of prospectus of mutual funds. – Due to inadvertence, the mutual funds failed to comply with the time lines for a renewal of a prospectus under the Legislation which caused the prospectus to lapse. – Mutual funds will not issue any units under the prospectus in a jurisdiction after the lapse date of the prospectus in that jurisdiction until the extension is granted.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c.S.5 as am., s. 62(5).