February 14, 2019
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction)
AND
IN THE MATTER OF CHILDREN’S EDUCATION FUNDS INC. (the Filer)
AND
THE CHILDREN’S EDUCATION TRUST OF CANADA GROUP OPTION PLAN, SELF INITIATED PLAN AND ACHIEVERS PLAN (each, a Plan, and collectively, the Plans)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption that the time limits pertaining to filing the renewal prospectus of the Plans be extended as if the lapse date of the Plans’ prospectus dated November 6, 2017 (the Current Prospectus) is June 6, 2019 (the Exemption Sought).
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 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, Quebec, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, Yukon, Northwest Territories, and Nunavut (together with the Jurisdiction, the Jurisdictions).
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:
The Filer is a corporation incorporated under the Business Corporations Act (Ontario).
The Filer is registered as a scholarship plan dealer under applicable securities legislation in each of the Jurisdictions. The Filer is also registered as an investment fund manager under applicable securities legislation in Newfoundland and Labrador, Ontario and Quebec.
Each Plan is an “Education Savings Plan” under s. 146.1 of the Income Tax Act (Canada). The Plans are currently administered by the Filer which is also the investment fund manager of the Plans.
Each Plan is a reporting issuer in each of the Jurisdictions.
Securities of the Plans are currently qualified for distribution in each of the Jurisdictions under the Current Prospectus and the Plans are reporting issuers under the laws of each of the provinces and territories of Canada.
None of the Plans, nor the Filer, is in default of securities legislation in any of the Jurisdictions.
The original lapse date of the Current Prospectus was November 6, 2018. Pursuant to a decision dated November 15, 2018 (the Previous Decision) the time limits pertaining to filing the renewal prospectus of the Plans were extended as if the lapse date of the Current Prospectus was February 6, 2019 (the Current Lapse Date). The Previous Decision was granted to allow sufficient time to complete discussions between the Filer and the OSC regarding proposed changes to the Filer’s operational and allocation practices affecting the Plans (the Discussions).
Under the Legislation, the distribution of the securities of each Plan would have to cease on the Current Lapse Date unless: (a) each Plan files a pro forma prospectus at least 30 days prior to the Current Lapse Date, (b) the final prospectus is filed no later than 10 days after the Current Lapse Date, and (c) a receipt for the final prospectus is obtained within 20 days of the Current Lapse Date.
A pro forma prospectus for the Plans was filed on October 9, 2018 in connection with the continuous public offering of the securities of each Plan. In accordance with the Previous Decision, without the Exemption Sought, the final prospectus for the Plans would have to be filed by February 16, 2019 and a receipt must be obtained by February 26, 2019 in order for the distribution of securities of the Plans to continue without interruption.
Currently, the Discussions are still ongoing and given the anticipated timing of the completion of the Discussions, the relevant disclosure in the final prospectus cannot be finalized prior to the Current Lapse Date. The Exemption Sought is requested in order to allow sufficient time to finalize this disclosure without resulting in the Plans being forced to cease distribution of their securities because the Current Prospectus has lapsed.
Since the date of the Current Prospectus, there has been no undisclosed material change in the Plans. Accordingly, the Current Prospectus continues to provide accurate information regarding the Plans.
Should any material changes be proposed in the interim, the Plans’ prospectus will be amended accordingly. Therefore, the Exemption Sought will not affect the currency or accuracy of the information contained in the Current Prospectus, and therefore will not be prejudicial to the public interest.
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.
“Darren McKall”
Darren McKall
Manager, Investment Funds & Structured Products Branch
ONTARIO SECURITIES COMMISSION
Application # 2019/0068