Ninepoint Partners LP (Re), 2021 CanLII 114761

November 15, 2021

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)

AND

IN THE MATTER OF NINEPOINT RESOURCE FUND, NINEPOINT SILVER EQUITIES FUND, NINEPOINT RISK ADVANTAGED U.S. EQUITY INDEX FUND, NINEPOINT RETURN ADVANTAGED U.S. EQUITY INDEX FUND AND NINEPOINT FOCUSED GLOBAL DIVIDEND FUND (collectively, the Continuing Funds)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of the Continuing Funds, for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) granting an exemption from:

(a) section 3.1 of National Instrument 81-102 Investment Funds (NI 81-102) to permit the filing of a simplified prospectus for the Continuing Funds (the Simplified Prospectus), notwithstanding that the initial investment required in respect of each of the Continuing Funds (the Seed Capital Requirement) will not be provided (the Seed Capital Relief);

(b) section 2.1 of National Instrument 81-101 Mutual Fund Prospectus Disclosure for the purposes of the following exemptions sought from Form 81-101F1 Contents of Simplified Prospectus (Form 81-101F1) and Form 81-101F3 Contents of Fund Facts Document (Form 81-101F3):

(i) Item 5(b) of Part B of Form 81-101F1 to permit the Continuing Funds to disclose the series start dates of the Terminating Funds as its series start dates in the Simplified Prospectus;

(ii) Item 9.1(b) of Part B of Form 81-101F1 to permit the Continuing Funds to use the performance history of the Terminating Funds to calculate its investment risk rating in the Simplified Prospectus;

(iii) Item 13.2 of Part B of Form 81-101F1 to permit the Continuing Funds to use the financial data of the Terminating Funds in making the calculation required under the subheading "Fund Expenses Indirectly Borne by Investors" in the Simplified Prospectus;

(iv) Item 2 of Part I of Form 81-101F3 to permit the Continuing Funds to use the management expense ratio (the MER) and the start date of each series of the Terminating Funds in the "Management expense ratio (MER)" and "Date series started" boxes, respectively, of the Quick Facts table in the fund facts documents of each series of the Continuing Funds (the Fund Facts);

(v) Item 3 of Part I of Form 81-101F3 to permit the Continuing Funds to show the investments of the Terminating Funds in the "Top 10 investments" and "Investment mix" tables in the Continuing Funds' initial Fund Facts;

(vi) Item 4 of Part I of Form 81-101F3 to permit the Continuing Funds to use the performance history of the Terminating Funds to calculate its investment risk rating in the Fund Facts;

(vii) Item 5 of Part I of Form 81-101F3 to permit the Continuing Funds to use the performance data of the Terminating Funds in the "Average return", "Year-by-year returns" and "Best and worst 3-month returns" sections in the Fund Facts; and

(viii) Item 1.3 of Part II of Form 81-101F3 to permit the Continuing Funds to use the MER, trading expense ratio (the TER) and fund expenses of the Terminating Funds in the "Fund expenses" section of the Fund Facts;

(c) sections 3.1(2) and 3B.2 of National Instrument 41-101 General Prospectus Requirements for the purposes of the exemptions sought from Form 41-101F2 Information Required in an Investment Fund Prospectus (Form 41-101F2) and Form 41-101F4 Information Required in an ETF Facts Document (Form 41-101F4):

(i) Item 17.2 of Form 41-101F2 to permit the ETF Series of Ninepoint Silver Equities Fund to disclose the trading price and volume information required thereunder of the ETF Series of Ninepoint Silver Equities Class as its trading price and volume information;

(ii) Item 2 of Part I of Form 41-101F4 to permit the ETF Series of Ninepoint Silver Equities Fund to disclose the start date, MER, average daily volume, number of days traded, market price, net asset value and average bid-ask spread of the ETF Series of Ninepoint Silver Equities Class as its information in the ETF facts document (the ETF Facts);

(iii) Item 3 of Part I of Form 41-101F4 to permit Ninepoint Silver Equities Fund to show the investments of Ninepoint Silver Equities Class in the "Top 10 investments" and "Investment mix" tables in Ninepoint Silver Equities Fund's initial ETF Facts;

(iv) Item 4 of Part I of Form 41-101F4 to permit Ninepoint Silver Equities Fund to use the performance history of Ninepoint Silver Equities Class to calculate its investment risk rating in the ETF Facts;

(v) Item 5 of Part I of Form 41-101F4 to permit the ETF Series of Ninepoint Silver Equities Fund to use the past performance data of the ETF Series of Ninepoint Silver Equities Class in the "Average return", "Year-by-year returns" and "Best and worst 3-month returns" sections in the ETF Facts; and

(vi) Item 1.3 of Part II of Form 41-101F4 to permit the ETF Series of Ninepoint Silver Equities Fund to use the MER, TER and fund expenses of Ninepoint Silver Equities Class in the "Fund expenses" section of the ETF Facts;

(d) sections 15.3(2), 15.6(1)(a)(i)(A), 15.6(1)(b), 15.6(1)(d)(i), 15.8(2)(a), 15.8(2)(a.1) 15.8(3)(a), 15.8(3)(a.1) and 15.9(2) of NI 81-102 to permit the Continuing Funds to use the performance data of the Terminating Funds in sales communications and reports to securityholders (collectively, Fund Communications) of the Continuing Fund (collectively, the Fund Communications Relief);

(e) section 15.1.1 of NI 81-102 and Items 2 and 4 of Appendix F Investment Risk Classification Methodology to NI 81-102 to permit the Continuing Funds to calculate its investment risk level using the performance history of the Terminating Funds (together with paragraphs (b), (c) and (d) above, the Past Performance Relief);

(f) sections 2.1 and 2.3 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) to permit the Continuing Funds to file comparative annual and interim financial statements that include information that is derived from the financial statements of the corresponding Terminating Funds;

(g) section 4.4 of NI 81-106 for relief from the requirements of Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance (Form 81-106F1) set out below, to permit each Continuing Fund to include in its annual and interim management reports of fund performance (MRFPs) the performance data and information derived from the financial statements and other financial information (collectively, the Financial Data) of the respective Terminating Fund as follows:

(i) Items 3.1(1), 3.1(7), 3.1(7.1), 3.1(8) and 3.1(13) of Part B of Form 81-106F1 to permit each Continuing Fund to use the financial highlights of the corresponding Terminating Fund in its Form 81-106F1;

(ii) Items 4.1(1), 4.1(2), 4.2(1), 4.2(2), 4.3(1)(a) and 4.3(1)(b) of Part B of Form 81-106F1 to permit each Continuing Fund to use the past performance data of the corresponding Terminating Fund in its Form 81-106F1; and

(iii) Items 3(1) and 4 of Part C of Form 81-106F1 to permit each Continuing Fund to use the financial highlights and past performance data of the corresponding Terminating Fund in its Form 81-106F1 (together with paragraph (f) above, the Continuous Disclosure Relief); and

(h) section 2.3(1)(f) of NI 81-102 to permit Ninepoint Silver Equities Fund to invest up to 20% in total of its net assets, taken at the market value thereof at the time of purchase, directly in silver, silver certificates and/or specified derivatives of which the underlying interest is silver, provided it complies with the terms and conditions of the existing decision (the Silver Class Relief) that applies to Ninepoint Silver Equities Class In the Matter of Sprott Asset Management LP (January 31, 2012) (the Past Exemptive 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 section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon and Nunavut (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.

In addition, the following terms have the meanings set out below:

"Terminating Funds" means Ninepoint Resource Class, Ninepoint Silver Equities Class, Ninepoint Risk Advantaged U.S. Equity Index Class, Ninepoint Return Advantaged U.S. Equity Index Class and Ninepoint Focused Global Dividend Class.

"Funds" means the Continuing Funds and the Terminating Funds.

Representations

The decision is based on the following facts represented by the Filer on behalf of itself and the Funds:

The Filer, the Funds and the Mergers

1The Filer is a limited partnership established under the laws of the Province of Ontario with its head office located in Toronto, Ontario.

2The Filer is the investment fund manager and portfolio manager of the Terminating Funds.

3The Filer is registered under the securities legislation: (i) in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, and Newfoundland and Labrador as an adviser in the category of portfolio manager; (ii) in Ontario, Newfoundland and Labrador and Quebec as an investment fund manager; and (iii) in British Columbia, Alberta, Quebec, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, and Newfoundland and Labrador as a dealer in the category of exempt market dealer. The Filer is also registered in Ontario as a commodity trading manager.

4The Terminating Funds are classes of Ninepoint Corporate Class Inc., a corporation established under the laws of Ontario.

5Securities of each Terminating Fund are currently qualified for sale in each of the Jurisdictions under a simplified prospectus, annual information form, Fund Facts and, in the case of the Ninepoint Silver Equities Class, ETF Facts, each dated April 30, 2021 (collectively, the Offering Documents), each of which has been prepared in accordance with NI 81-102.

6Each Continuing Fund is expected on its creation to be an open-ended trust established under the laws of Ontario. The Filer will be the investment fund manager and trustee of each of the Continuing Funds upon creation.

7On October 27, 2021, the Filer filed a preliminary simplified prospectus, annual information form, Fund Facts and, in the case of the Ninepoint Silver Equities Fund, ETF Facts, in each of the Jurisdictions to qualify the distribution of the securities of each series of the Continuing Funds. The Filer will not begin distributing securities of the Continuing Funds prior to the Mergers (as defined below).

8Each Continuing Fund is expected to be a reporting issuer under the applicable securities legislation in each of the Jurisdictions and is expected to be subject to NI 81-102.

9Each Continuing Fund will offer the same series of units as its respective Terminating Fund.

10Neither the Filer, nor any of the Terminating Funds, are in default of securities legislation in any of the Jurisdictions.

11Each Terminating Fund follows, and each Continuing Fund will follow, the standard investment restrictions and practices established under NI 81-102, except pursuant to the terms of any exemption that has been previously obtained.

12The Filer proposes to merge each Terminating Fund into the corresponding Continuing Fund (the Mergers) on a tax-deferred basis after the close of business on or about December 10, 2021 (the Merger Date) as follows:

Terminating Fund Continuing Fund

Ninepoint Resource Class Ninepoint Resource Fund

Ninepoint Silver Equities Class Ninepoint Silver Equities Fund

Ninepoint Risk Advantaged U.S. Equity Index Class Ninepoint Risk Advantaged U.S. Equity Index Fund

Ninepoint Return Advantaged U.S. Equity Index Class Ninepoint Return Advantaged U.S. Equity Index Fund

Ninepoint Focused Global Dividend Class Ninepoint Focused Global Dividend Fund

13The Mergers satisfy the pre-approval criteria set out in section 5.6 of NI 81-102, and the Independent Review Committee of the Terminating Funds approved the Mergers at a meeting held on October 5, 2021.

14As the Continuing Funds are new, they will not have their own past performance data on the date the Mergers are implemented.

Seed Capital Relief

15The Filer does not intend to subscribe for $150,000 of units of each Continuing Fund as required by the Seed Capital Requirement because the assets of the corresponding Terminating Fund (which will become the assets of that Continuing Fund in connection with the implementation of the applicable Merger) are significantly in excess of the $150,000 Seed Capital Requirement. Accordingly, the Filer is of the view that any seed capital injected into a Continuing Fund prior to a Merger will not provide any additional benefit to unitholders.

16On the Merger Date, unitholders of a Continuing Fund will hold units of that Continuing Fund equal to the same net asset value as they did before as securityholders of the corresponding Terminating Fund, and therefore, the Continuing Funds will each have already received subscriptions in excess of $150,000.

Past Performance Relief and Continuous Disclosure Relief

17Subject to receipt of the Seed Capital Relief, the Continuing Funds will not have any assets (other than a nominal amount to establish it) or liabilities at the time of the applicable Merger.

18The assets of the Terminating Funds will be transferred to the equivalent Continuing Funds in connection with the implementation of the Mergers.

19As the Filer intends to cease distribution of the Terminating Funds at the close of business on the business day prior to the Merger Date, it does not intend to renew the Terminating Funds' simplified prospectus and annual information form after the lapse date.

20Each Continuing Fund will be a new fund. While each Continuing Fund will have the same assets and liabilities as the corresponding Terminating Fund, as a new fund, it will not have its own Financial Data as at the Merger Date.

21The Financial Data of the Terminating Funds are significant information which can assist investors in determining whether to purchase securities of the Continuing Funds. In the absence of the Past Performance Relief and Continuous Disclosure Relief, investors will have no historical financial or performance information (such as past performance) on which to base such an investment decision.

22Without the Past Performance Relief and Continuous Disclosure Relief, the sales communications pertaining to, and the MRFPs of, the Continuing Funds cannot include Financial Data of the Terminating Funds that relate to a period prior to the applicable Merger and the Continuing Funds cannot provide performance data in their sales communications until they have distributed securities under a simplified prospectus for at least 12 months.

23The Filer proposes to:

(a) disclose the series start dates of the Terminating Funds as the series start dates of the Continuing Funds:

(i) in the "Fund Details" table in Part B of the Simplified Prospectus;

(ii) under the subheading "Date series started" under the heading "Quick Facts" in the Fund Facts; and

(iii) under the subheading "Date series started" under the heading "Quick Facts" in the ETF Facts (if applicable);

(b) use the performance data of the Terminating Funds to calculate the risk rating of the Continuing Funds in:

(i) the Simplified Prospectus;

(ii) the Fund Facts; and

(iii) the ETF Facts (if applicable);

(c) use the performance data of the Terminating Funds in:

(i) the Fund Communications of the Continuing Funds;

(ii) the "Average return", "Year-by-year returns" and "Best and worst 3-month returns" subsections of the Fund Facts for the Continuing Funds; and

(iii) the "Average return", "Year-by-year returns" and "Best and worst 3-month returns" subsections of the ETF Facts for Ninepoint Silver Equities Fund;

(d) use the MER of the Terminating Funds for the purposes of calculating the information required under the subheading "Fund Expenses Indirectly Borne by Investors" in Part B of the Simplified Prospectus for the Continuing Funds;

(e) show the investments of the Terminating Funds in the "Top 10 investments" and "Investment mix" tables in the initial Fund Facts and the initial ETF Facts (if applicable) for the Continuing Funds;

(f) use the MER, TER and fund expenses of the Terminating Funds in the "Fund expenses" sections of the Fund Facts and the ETF Facts (if applicable) for the Continuing Funds;

(g) use the trading price and volume information of Ninepoint Silver Equities Class for Ninepoint Silver Equities Fund in the Simplified Prospectus;

(h) use the average daily volume, number of days traded, market price, net asset value and average bid-ask spread of Ninepoint Silver Equities Class in the ETF Facts for Ninepoint Silver Equities Fund;

(i) incorporate by reference into the Simplified Prospectus the most recent annual financial statements and MRFPs of the Terminating Funds for the period ended December 31, 2020, and the most recent interim June 30, 2021 (collectively, the Terminating Fund Disclosure), until such Terminating Fund Disclosure is superseded by more current financial statements and MRFPs of the Continuing Funds;

(j) prepare annual MRFPs for the Continuing Funds commencing with the year ending December 31, 2021 and interim MRFPs for the Continuing Funds commencing with the period ending June 30, 2022, using the Terminating Funds' financial highlights and past performance; and

(k) prepare comparative annual financial statements for the Continuing Funds commencing with the year ending December 31, 2021 and interim financial statements for the Continuing Funds commencing with the period ending June 30, 2022 using the Terminating Funds' financial highlights and past performance.

24The Filer is seeking to make the Mergers as seamless as possible for investors of the Terminating Funds. Accordingly, the Filer submits that treating a Continuing Fund as fungible with the corresponding Terminating Fund for purposes of the starting dates, investment holdings and Financial Data would be beneficial to investors and that to do otherwise would cause unnecessary confusion among investors concerning the difference between the Terminating Funds and the Continuing Funds.

25The Filer submits that investors will not be misled if the starting dates, investment holdings and Financial Data of a Continuing Fund reflects the starting dates, investment holdings and Financial Data of the corresponding Terminating Fund.

Past Exemptive Relief

26Each Continuing Fund will have an investment objective and investment strategies that are substantially similar to the investment objective and investment strategies of the corresponding Terminating Fund.

27Pursuant to the Silver Class Relief, Ninepoint Silver Equities Class received exemptive relief to invest up to 20% in total of its net assets, taken at the market value thereof at the time of purchase, directly in silver, silver certificates and/or specified derivatives of which the underlying interest is silver.

28Without the Past Exemptive Relief, Ninepoint Silver Equities Fund cannot properly effect an investment strategy which is substantially similar to its corresponding Terminating Fund.

29The Filer is seeking to make the Continuing Funds as identical as possible to the Terminating Funds, but for the change in structure from classes of a corporation to trusts.

30The Filer proposes that Ninepoint Silver Equities Fund be permitted to rely on the Silver Class Relief as if it is applied directly to it.

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:

1. the Seed Capital Relief is granted;

2. the Past Performance Relief is granted, provided that:

(a) the Fund Communications of each series of each Continuing Fund include the applicable past performance data of the corresponding series of the corresponding Terminating Fund prepared in accordance with Part 15 of NI 81-102;

(b) the Simplified Prospectus:

(i) incorporates by reference the Terminating Fund Disclosure, until such Terminating Fund Disclosure is superseded by more current financial statements and MRFPs of the Continuing Fund;

(ii) states that the start date for each series of the Continuing Fund is the start date of the corresponding series of the Terminating Fund; and

(iii) discloses the Merger where the start date for each series of the Continuing Fund is stated;

(c) the Fund Facts of each series of the Continuing Fund and the ETF Facts of the ETF Series of the Ninepoint Silver Equities Fund:

(i) states that the "Date series started" date is the "Date series started" date of the corresponding series of the Terminating Fund;

(ii) includes the performance data of the corresponding series of the Terminating Fund prepared in accordance with Part 15 of NI 81-102; and

(iii) discloses the Merger where the "Date series started" date is stated; and

(d) the Continuing Fund prepares its MRFPs in accordance with the Continuous Disclosure Relief; and

3. the Continuous Disclosure Relief is granted, provided that:

(a) the MRFPs and financial statements for the Continuing Funds include the Financial Data of the Terminating Funds pertaining to the corresponding series of the Terminating Funds and disclose the Mergers for the relevant time periods; and

(b) the Continuing Funds prepare their Simplified Prospectus, Fund Facts, ETF Facts and other Fund Communications in accordance with the Seed Capital Relief and Past Performance Relief.

4. the Past Exemptive Relief is granted, provided that:

(a) the Investment Strategies section in Ninepoint Silver Equities Fund's Simplified Prospectus will include the following disclosure:

(i) that the Fund has received approval of the Canadian securities regulators to permit the Fund to invest directly in silver, silver certificates and/or specified derivatives of which the underlying interest is silver, up to 20% in total of its net assets taken at the market value at the time of the purchase; and

(ii) the unique risks associated with an investment in the Fund including the risk that direct purchases of silver by the Fund may generate higher transaction and custody costs than other types of investments, which may impact the performance of the Fund.