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Ontario Securities Commission
December 16, 2014
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
NEXT EDGE CAPITAL CORPORATION
(the Filer)
AND
IN THE MATTER OF
NEXT EDGE GLG EMERGING MARKETS INCOME FUND
and NEXT EDGE GLG EM INCOME FUND
(collectively, the Terminating Funds)
AND
IN THE MATTER OF
NEXT EDGE THETA YIELD FUND
(the Continuing Fund and, together with the Terminating Funds, the Funds)
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## DECISION
### Background
The principal regulator in the Jurisdiction has received an application from the Filer, the investment fund manager of each of the Funds, for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for approval of the merger (the Merger Approval) pursuant to paragraph 5.5(1)(b) of National Instrument 81-102 – Investment Funds (NI 81-102).
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 each of the other provinces and territories of Canada.
### 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.
The following terms shall have the following meanings:
“Circular” means the notice of the meeting, management information circular and form of proxy of the Terminating Funds dated November 12, 2014.
“EM Income Fund” means Next Edge GLG EM Income Fund.
“GLG Emerging Markets Income Fund” means Next Edge GLG Emerging Markets Income Fund.
“IRC” means the independent review committee of the Terminating Funds.
“Meeting” means the adjourned meeting of the unitholders of the Terminating Funds scheduled to be held on or about December 17, 2014.
“Merger” means the proposed merger of the Terminating Funds into the Continuing Fund to be effective on the Merger Effective Date subject to the receipt of applicable unitholder and regulatory approvals.
“Merger Effective Date” means the date for effecting the Merger, which is expected to be the business day immediately following the date on which the required approvals are obtained for the Merger.
“Tax Act” means the [Income Tax Act](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-1-5th-supp/latest/rsc-1985-c-1-5th-supp.html) (Canada).
### Representations
This decision is based on the following facts represented by the Filer:
#### The Filer
[1] The Filer is a privately-owned corporation existing under the [Business Corporations Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-b16/latest/rso-1990-c-b16.html) (Ontario) and its head office is located at 1 Toronto Street, Suite 200, Toronto, Ontario.
[2] The Filer is the investment fund manager of each of the Funds and is registered as investment fund manager in the Provinces of Newfoundland and Labrador, Ontario and Quebec.
#### GLG Emerging Markets Income Fund
[3] GLG Emerging Markets Income Fund is a closed-end investment fund established under the laws of the Province of Ontario on October 24, 2011 and its head office is located at 1 Toronto Street, Suite 200, Toronto, Ontario.
[4] The beneficial interest in the net assets of GLG Emerging Markets Income Fund is divided into trust units of two classes, Class A Units and Class F Units. Since its initial public offering, which was completed in November 2011, GLG Emerging Markets Income Fund has not issued any additional securities.
[5] As at December 8, 2014, the net asset value (NAV) of the Class A Units of GLG Emerging Markets Income Fund was $11,663,674.61 and the NAV per Class A Unit was $7.01 and the NAV of the Class F Units of GLG Emerging Markets Income Fund was $1,495,247.98 and the NAV per Class F Unit was $7.69.
[6] GLG Emerging Markets Income Fund was created to provide exposure to an actively managed, liquid and diversified portfolio of securities and other instruments across various asset classes primarily within global emerging markets (the Portfolio).
[7] GLG Emerging Markets Income Fund obtained economic exposure to the Portfolio through a forward agreement, as the Portfolio was held by GLG Emerging Markets Income Portfolio Ltd. (GLG Ltd.), an exempted company with limited liability incorporated in the Cayman Islands.
[8] The Portfolio was actively managed by GLG Partners LP, a limited partnership registered under the Limited Partnership Act, 1907 of England and Wales. GLG Partners (Cayman) Limited acted as the manager of GLG Ltd.
[9] Prior to June 2014, the manager of GLG Emerging Markets Income Fund as well as the manager and the portfolio manager of GLG Ltd. were indirectly wholly-owned subsidiaries of Man Group plc. (Man).
[10] On October 28, 2014, the Manager announced that GLG Ltd. will be liquidated and, as a result, the forward agreement entered into by GLG Emerging Markets Income Fund was settled on November 18, 2014. GLG Emerging Markets Income Fund is currently invested in cash.
#### EM Income Fund
[11] EM Income Fund is a commodity pool structured as an open-end investment trust established under the laws of the Province of Ontario on May 18, 2012 and its head office is located at 1 Toronto Street, Suite 200, Toronto, Ontario.
[12] The beneficial interest in the net assets of EM Income Fund is divided into trust units of 11 classes of which only Class L Units, Class M Units, Class N Units and Class O Units are issued and outstanding.
[13] As at December 8, 2014, the NAV of the Class L Units of EM Income Fund was $3,899,603 and the NAV per Class L Unit was $6.97, the NAV of the Class M Units of EM Income Fund was $1,308,632 and the NAV per Class M Unit was $7.26, the NAV of the Class N Units of EM Income Fund was $2,232,986 and the NAV per Class N Unit was $8.10 and the NAV of the Class O Unit of EM Income Fund was $155,914 and the NAV per Class O Unit was $8.42.
[14] EM Income Fund was created to provide exposure to an actively managed, liquid and diversified portfolio of securities and other instruments across various asset classes primarily within global emerging markets (the EM Portfolio).
[15] EM Income Fund obtained economic exposure to the EM Portfolio through a forward agreement, as the EM Portfolio was held by GLG Emerging Markets Income Portfolio II Ltd. (GLG II Ltd.), an exempted company with limited liability in the Cayman Islands.
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minicounsel