Horizons ETFs Management (Canada) Inc. (Re), 2021 CanLII 12177

February 22, 2021

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction)

AND

(the Filer)

AND

(the Funds)

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 long form prospectus of the Commodity Yield ETFs (as defined in Schedule A) dated March 9, 2020 (the Commodity Yield Prospectus), long form prospectus of the Enhanced Income ETFs (as defined in Schedule A) dated May 5, 2020 (the Enhanced Income Prospectus), long form prospectus of the June Corporate Class ETFs (as defined in Schedule A) dated June 22, 2020 (the June 2020 Corporate Class Prospectus) and long form prospectus of the July Corporate Class ETF (as defined in Schedule A) dated July 20, 2020 (the July 2020 Corporate Class Prospectus and, together with the Commodity Yield Prospectus, the Enhanced Income Prospectus and the June 2020 Corporate Class Prospectus, the Prospectuses) be extended to those time limits that would apply if the lapse dates of the Prospectuses were May 29, 2021 (in the case of the Enhanced Income Prospectus), June 26, 2021 (in the case of the Commodity Yield Prospectus) and August 26, 2021 (in the case of the June 2020 Corporate Class Prospectus and the July 2020 Corporate Class Prospectus) (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(i) the Ontario Securities Commission is the principal regulator for this application; and

(ii) 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 corporation incorporated under the laws of Canada. The Filer’s head office is located in Toronto, Ontario.
The Filer is registered as a portfolio manager in Alberta, British Columbia, Ontario and Québec, an exempt market dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan, a commodity trading manager and a commodity trading adviser in Ontario and an investment fund manager in each of Ontario, Québec and Newfoundland and Labrador.
The Filer is the investment fund manager of the Funds.
Each of the Funds is an exchange-traded mutual fund (ETF) established under the laws of Ontario, and is a reporting issuer as defined in the securities legislation of each of the Jurisdictions.
Neither the Filer nor any of the Funds are in default of securities legislation in any of the Jurisdictions.
The Funds currently distribute securities in the Jurisdictions under the Prospectuses. Securities of each of the Funds trade on the Toronto Stock Exchange.
Pursuant to subsection 62(1) of the Securities Act (Ontario) (the Act), the respective lapse dates of the Commodity Yield Prospectus, Enhanced Income Prospectus, June 2020 Corporate Class Prospectus and July 2020 Corporate Class Prospectus are March 9, 2021, May 5, 2021, June 22, 2021 and July 20, 2021 (each a Lapse Date, and collectively, 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 Filer is the investment fund manager of (i) eleven other ETFs (the May Funds) that currently distribute their securities to the public under a prospectus that has a lapse date of May 29, 2021 (the May Prospectus) (ii) two other ETFs (the June Funds) that currently distribute their securities to the public under a prospectus that has a lapse date of June 26, 2021 (the June Prospectus) and (iii) eighteen other ETFs (the August Funds) that currently distribute their securities to the public under a prospectus that has a lapse date of August 26, 2021 (the August Prospectus).
The Filer wishes to combine the (i) Commodity Yield Prospectus with the June Prospectus, (ii) Enhanced Income Prospectus with the May Prospectus and (iii) the June 2020 Corporate Class Prospectus and the July 2020 Corporate Class Prospectus with the August Prospectus, in order to reduce renewal, printing and related costs of the Funds and the May Funds, June Funds and August Funds, as applicable.
Offering (i) the Commodity Yield ETFs and the June Funds under one prospectus, (ii) the Enhanced Income ETFs and the May Funds under one prospectus and (iii) the June 2020 Corporate Class ETFs, July 2020 Corporate Class ETF and the August Funds under one prospectus, would facilitate the distribution of the Funds in the Jurisdictions under the same prospectus and enable the Filer to streamline disclosure across the Filer’s fund platform. As the Funds, the May Funds, the June Funds and the August Funds are all managed by the Filer, offering them under three prospectuses (as opposed to seven) will allow investors to more easily compare their features.
It would be unreasonable to incur the costs and expenses associated with preparing seven separate renewal prospectuses given how close in proximity the Lapse Dates are to one another.
There have been no material changes in the affairs of each Fund since the date of the applicable Prospectus, other than those for which amendments have been filed. Accordingly, the Prospectus and current ETF Facts of each Fund represents 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 ETF 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 ETF 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 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

Ontario Securities Commission

App. No. 2021/0066

Schedule “A”

Commodity Yield ETFs

Horizons Natural Gas Yield ETF

Horizons Gold Yield ETF

(each, a “Commodity Yield ETF” and collectively, the “Commodity Yield ETFs”)

Enhanced Income ETFs

Horizons Enhanced Income Equity ETF

Horizons Enhanced Income Energy ETF

Horizons Enhanced Income Financials ETF

Horizons Enhanced Income Gold Producers ETF

Horizons Enhanced Income US Equity (USD) ETF

Horizons Enhanced Income International Equity ETF

(each, an “Enhanced Income ETF” and collectively, the “Enhanced Income ETFs”)

June 2020 Corporate Class ETFs

Horizons Morningstar Hedge Fund Index ETF

Horizons Absolute Return Global Currency ETF

Horizons USD Cash Maximizer ETF

Horizons Emerging Markets Equity Index ETF

(each, a “June 2020 Corporate Class ETF” and collectively, the “June 2020 Corporate Class ETFs”)

July 2020 Corporate Class ETF

Horizons ReSolve Adaptive Asset Allocation ETF

(the “July 2020 Corporate Class ETF”)