May 22, 2019
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 PURPOSE INVESTMENTS INC. (the Filer)
AND
MLD CORE FUND, PURPOSE FLOATING RATE INCOME FUND AND PURPOSE GLOBAL FINANCIALS INCOME FUND (the Funds)
DECISION
Background
The principal regulator in the Jurisdiction 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 respective time limits for the renewal of the simplified prospectus of MLD Core Fund (the MLD Fund) dated June 1, 2018 (the MLD Prospectus), and combined amended and restated simplified prospectus of Purpose Floating Rate Income Fund (the PFRI Fund) and Purpose Global Financials Income Fund (the PGFI Fund) dated July 10, 2018, which amended and restated the simplified prospectus dated June 25, 2018 (the Purpose Prospectus and together with the MLD Prospectus, the Prospectuses) be extended to those time limits that would apply if the lapse date of each Prospectus were July 10, 2019 (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 subsection 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, New Brunswick, Newfoundland and Labrador, Nova Scotia, Quebec, Prince Edward Island, Northwest Territories, Nunavut, and Yukon (together with Ontario, the Canadian 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 amalgamated under the laws of Ontario. The Filer’s head office is located in Toronto, Ontario.
The Filer is registered as (i) an investment fund manager in Ontario, Quebec, and Newfoundland and Labrador, (ii) a portfolio manager in British Columbia, Ontario, and Quebec, (iii) a commodity trading manager in Ontario, and (iv) as an exempt market dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebec, and Saskatchewan.
The Filer is the investment fund manager of the Funds.
Each of the Funds is an open-ended mutual fund trust established under the laws of Ontario. The PFRI Fund and PGFI Fund are each reporting issuers under the securities legislation of each of the Canadian Jurisdictions. The MLD Fund is a reporting issuer under the securities legislation of each of the Canadian Jurisdictions, except for Quebec.
Neither the Filer nor any of the Funds are in default of securities legislation in any of the Canadian Jurisdictions.
The MLD Fund currently distributes securities in the Canadian Jurisdictions, except for Quebec, under the MLD Prospectus.
The PFRI Fund and PGFI Fund each currently distribute securities in the Canadian Jurisdictions under the Purpose Prospectus.
Pursuant to subsection 62(1) of the Securities Act (Ontario) (the Act), the lapse date of the MLD Prospectus is June 1, 2019 (the MLD Lapse Date), and the lapse date of the Purpose Prospectus is June 25, 2019 (the Purpose Lapse Date, and together with the MLD Lapse Date, the Lapse Dates). Accordingly, under subsection 62(2) of the Act, the distribution of securities of each of the Funds would have to cease on the applicable Lapse Date unless: (i) each of the Funds files a pro forma prospectus at least 30 days prior to the applicable Lapse Date; (ii) the final prospectus is filed no later than 10 days after the applicable Lapse Date; and (iii) a receipt for the final prospectus is obtained within 20 days of the applicable Lapse Date.
The pro forma prospectus of the MLD Fund was required to have been filed by May 2, 2019 (the MLD Pro Forma Deadline) in order for securities of the MLD Fund to continue to be distributed after the MLD Lapse Date.
Without the Exemption Sought, the pro forma prospectus of the PFRI Fund and PGFI Fund would be required to be filed by May 24, 2019 (the Purpose Pro Forma Deadline) in order for securities of the PFRI Fund and PGFI Fund to continue to be distributed after the Purpose Lapse Date.
The Filer wishes to combine the Prospectuses into a prospectus dated on or about July 10, 2019 in order to reduce renewal, printing and related costs.
Offering the Funds under one prospectus would facilitate the distribution of the Funds in the Canadian Jurisdictions under the same prospectus and enable the Filer to streamline disclosure across the Filer’s fund platform. As the Funds are managed by the Filer, are established under the same declaration of trust, and share a number of common features, offering them under the same prospectus will allow investors to more easily compare their features.
Since securities of the MLD Fund were not previously offered in Quebec, in order to combine the Prospectuses into one prospectus, securities of the MLD Fund will need to be qualified for distribution in Quebec, and renewal documentation and disclosure relating to the MLD Fund will need to be translated into French.
The process being undertaken by the Filer to combine the Prospectuses into one prospectus requires additional time in order to properly update and streamline the disclosure of the Funds, and to complete the aforementioned translation work relating to the MLD Fund. Given the time required to perform these tasks accurately, the Filer did not have sufficient time to finalize and file the pro forma prospectus combining the Funds by the MLD Pro Forma Deadline, and does not have sufficient time to finalize and file the pro forma prospectus combining the Funds by the Purpose Pro Forma Deadline.
In addition, there are dedicated systems, procedures and resources required to prepare the renewal prospectuses, annual information forms, and fund facts documents (the Renewal Documents) of each of the Funds. It would have been impractical to alter and modify all of those systems, procedures and resources, and unreasonable to incur the costs and expenses associated therewith, so that the Renewal Documents of the PFRI Fund and PGFI Fund could be filed earlier with the Renewal Documents of the MLD Fund by the MLD Pro Forma Deadline.
There have been no material changes in the affairs of each of the Funds since the date of the applicable Prospectus. Accordingly, the Prospectus and current fund facts document(s) of each of the Funds represent current information regarding such Fund.
Given the disclosure obligations of the Funds, should a material change in the affairs of any of the Funds occur, the Prospectus and current fund facts document (s) of the applicable Fund(s) will be amended as required under the Legislation.
New investors in the Funds will receive the most recently filed fund facts document(s) of the applicable Fund(s). The Prospectuses will still be available upon request.
The Exemption Sought will not affect the accuracy of the information contained in the Prospectuses or the fund facts document(s) of the applicable Funds, and will therefore 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 and Structured Products Branch Ontario Securities Commission
Application #2019/0252