July 21, 2020
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
NINEPOINT PARTNERS LP
(the Filer)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of certain alternative mutual funds as listed in Schedule A (collectively, the Existing Alternative Funds) and Ninepoint Enhanced U.S. Equity Class (the Proposed Alternative Fund, and collectively, with the Existing Alternative Funds, the Existing Funds) and any alternative mutual fund established or restructured in the future and managed by the Filer or an affiliate of the Filer (the Future Funds, and collectively, with the Existing Funds, the Funds), for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that:
(a) the time limits for the renewal of the simplified prospectus of the Existing Alternative Funds dated November 8, 2019 be extended to the time limits that would apply if the lapse date of the simplified prospectus of the Existing Alternative Funds was April 21, 2021 (the Lapse Date Relief); and
(b) grants relief to the Funds from the requirement in subsection 5.1(4) of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) which states that a simplified prospectus for an alternative mutual fund must not be consolidated with a simplified prospectus of another mutual fund if the other mutual fund is not an alternative mutual fund (the Consolidation Relief and together with the Lapse Date Relief, the Requested Relief).
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 each of the other provinces and territories of Canada (together with Ontario, 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 limited partnership formed and organized under the laws of the Province of Ontario. The general partner of the Filer is Ninepoint Partners GP Inc., a corporation incorporated under the laws of the Province of Ontario. The head office of the Filer is located in Ontario.
The Filer is registered as (i) an investment fund manager in Ontario, Quebec and Newfoundland and Labrador, (ii) a portfolio manager in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia and Newfoundland and Labrador, and (iii) an exempt market dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador and Quebec.
The Filer is the trustee and manager of each of the Existing Alternative Funds. The Filer is also the manager of 18 other mutual funds as listed in Schedule B (the Other Funds), including the Proposed Alternative Fund that are offered in each of the Jurisdictions under a simplified prospectus with a lapse date of April 21, 2021.
Neither the Filer nor any of the Existing Funds is in default of securities legislation in any of the Jurisdictions.
Each of the Existing Alternative Funds is an open-ended mutual fund trust established under the laws of Ontario. The Proposed Alternative Fund represents one class of shares of Ninepoint Corporate Class Inc., a mutual fund corporation created under the laws of Ontario. Each of the Existing Funds is a reporting issuer in each of the Jurisdictions.
Securities of the Existing Alternative Funds are currently qualified for distribution in each of the Jurisdictions under the current simplified prospectus of the Existing Alternative Funds dated November 8, 2019, as amended by amendment no. 1 dated April 9, 2020 and amendment no. 2 dated May 1, 2020 (the Current Prospectus).
The lapse date for the Current Prospectus is November 8, 2020 (the Current Lapse Date). Accordingly, under the Legislation, the distribution of securities of each of the Existing Alternative Funds would have to cease on the Current Lapse date unless: (i) the Existing Alternative Funds file a pro forma simplified prospectus at least 30 days prior to its Current Lapse Date; (ii) the final simplified prospectus is filed no later than 10 days after its Current Lapse Date; and (iii) a receipt for the final simplified prospectus is obtained within 20 days after its Current Lapse Date.
Securities of the Proposed Alternative Fund are currently qualified for distribution in each of the Jurisdictions under the current simplified prospectus of the Other Funds dated April 21, 2020, as amended by amendment no. 1 dated May 27, 2020.
The Filer wishes to combine the simplified prospectus of the Existing Alternative Funds with the simplified prospectus of the Other Funds in order to reduce renewal, printing and related costs. Offering the Existing Alternative Funds under the same renewal simplified prospectus and annual information form (the Prospectus Documents) as the Other Funds would facilitate the distribution of the Existing Alternative Funds in the Jurisdictions under the same prospectus disclosure and enable the Filer to streamline disclosure across the Filer’s fund platform. The Existing Alternative Funds share many common operational and administrative features with the Other Funds and combining them in the same simplified prospectuses will allow investors to more easily compare the features of the Other Funds and the Existing Alternative Funds.
The Filer may make changes to the features of the Other Funds as part of the process of renewing the Other Funds’ Prospectus Documents. The ability to file the Prospectus Documents of the Existing Alternative Funds with those of the Other Funds will ensure that the Filer can make the operational and administrative features of the Existing Alternative Funds and the Other Funds consistent with each other, if necessary.
If the Lapse Date Relief is not granted, and assuming that the Consolidation Relief is granted, it will be necessary to renew the Prospectus Documents of the Existing Alternative Funds twice within a short period of time in order to consolidate the Prospectus Documents of the Existing Alternative Funds with the Prospectus Documents of the Other Funds, and it would be unreasonable for the Filer to incur the costs and expenses associated therewith, given investors would not be prejudiced by the Lapse Date Relief.
There have been no material changes in the affairs of the Existing Alternative Funds since the date of the Current Prospectus. Accordingly, the Current Prospectus and current fund facts document(s) of each of the Existing Alternative Funds continue to provide accurate information regarding the Existing Alternative Funds.
Given the disclosure obligations of the Filer and the Existing Alternative Funds, should any material change in the business, operations or affairs of the Existing Alternative Funds occur, the Current Prospectus and current fund facts document(s) of the applicable Existing Alternative Fund(s) will be amended as required under the Legislation.
New investors of the Existing Alternative Funds will receive delivery of the most recently filed fund facts document(s) of the applicable Fund(s). The Current Prospectus of the Existing Alternative Funds will remain available to investors upon request.
The Lapse Date Relief will not affect the accuracy of the information contained in the Current Prospectus or the respective fund facts document(s) of each of the Existing Alternative Funds, and will therefore not be prejudicial to the public interest.
As noted above, consolidating the simplified prospectuses would reduce renewal, printing and related costs. Offering the Existing Funds under the same renewal simplified prospectus and annual information form as the Other Funds would facilitate the distribution of the Existing Funds in the Jurisdictions under the same prospectus and enable the Filer to streamline disclosure across the Filer’s fund platform. Even though the Existing Funds are, or will be, alternative mutual funds, they share many common operational and administrative features with the Other Funds that are conventional mutual funds and combining them in the same simplified prospectuses will allow investors to more easily compare the features of the Other Funds and the Funds.
NI 41-101 does not contain an equivalent provision to subsection 5.1(4) of NI 81-101. Accordingly, an investment fund manager that manages exchange-traded funds (ETFs) is permitted to consolidate a prospectus under National Instrument 41-101 General Prospectus Requirements (NI 41-101) for its ETFs that are alternative mutual funds with a prospectus for its ETFs that are conventional mutual funds. There is no reason why mutual funds filing a prospectus under NI 81-101 should be treated differently from ETFs filing a prospectus under NI 41-101.
If the Consolidation Relief is not granted, it will be necessary to add the Proposed Alternative Fund into the prospectus documents of the Existing Alternative Funds very quickly after the restructuring of the Proposed Alternative Fund from a conventional mutual fund to an alternative mutual fund is completed, and it would be unreasonable for the Filer to incur the costs and expenses associated therewith, given investors would not be prejudiced by the Consolidation Relief.
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 Requested Relief is granted.
“Darren McKall”
Darren McKall
Manager, Investment Funds and Structured Products
Ontario Securities Commission
Application #2020/0347
Schedule A
Ninepoint FX Strategy Fund
Ninepoint Alternative Credit Opportunities Fund
Schedule B
Ninepoint Diversified Bond Fund
Ninepoint Energy Fund
Ninepoint Global Infrastructure Fund
Ninepoint Global Real Estate Fund
Ninepoint Gold and Precious Minerals Fund
Ninepoint High Interest Savings Fund
Ninepoint Alternative Health Fund
Ninepoint International Small Cap Fund
Ninepoint Concentrated Canadian Equity Fund
Ninepoint Diversified Bond Class
Ninepoint Resource Class
Ninepoint Silver Equities Class
Ninepoint Enhanced Balanced Class
Ninepoint Enhanced Equity Class
Ninepoint Enhanced U.S. Equity Class
Ninepoint Focused Global Dividend Class
Ninepoint Gold Bullion Fund
Ninepoint Silver Bullion Fund