T. Rowe Price (Canada), Inc. (Re), 2021 CanLII 23561

March 29, 2021

IN THE MATTER OF

THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction),

AND

IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

T. ROWE PRICE (CANADA), INC. (the Filer)

AND

T. ROWE PRICE GLOBAL MULTI-SECTOR BOND FUND

DECISION

BACKGROUND

The principal regulator in the Jurisdiction has received an application (the Application) from the Filer on behalf of the T. Rowe Price Global Multi-Sector Bond Fund that is managed by the Filer or by a successor of such Filer (the Fund) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for relief from:

1. the requirement in section 2.2 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) that the Fund file its audited annual financial statements and auditor’s report on or before the 90^th^ day after the Fund’s most recently completed financial year (the Annual Filing Deadline); and

2. the requirement under paragraph 5.1(2)(a) of NI 81-106 that the Fund deliver to its securityholders its audited annual financial statements by the Annual Filing Deadline (the Annual Delivery Requirement)

(collectively, relief from the Annual Filing Deadline and the Annual Delivery Requirement, the Relief 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 section 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 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

1. The head office of T. Rowe Price (Canada), Inc. is located in Baltimore, Maryland.

2. T. Rowe Price (Canada), Inc. is registered as an exempt market dealer and portfolio manager in the Jurisdictions, an investment fund manager in the provinces of Ontario, Quebec and Newfoundland and Labrador and as an investment adviser with the Securities and Exchange Commission.

3. The Fund is managed by the Filer or by an affiliate or successor of the Filer.

4. The Filer is not a reporting issuer in any jurisdiction and is not in default of any of the requirements of the Legislation.

The Fund

5. The Fund is an open-ended unit trust established under the laws of the Province of Ontario pursuant to a trust agreement dated May 1, 2014.

6. Units of the Fund are offered for sale on the relevant valuation date as determined by the trust agreement to qualified investors in the Jurisdictions pursuant to exemptions from the prospectus requirements under National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106).

7. As of the date of the Application, the Fund had only one securityholder, which is a sophisticated institutional investor (the Fund Securityholder).

8. The Fund is not a reporting issuer in any jurisdiction and is not in default of securities legislation in any jurisdiction.

9. The Fund has a financial year-end of December 31.

10. The Fund’s investment objective is to maximize the value of its units through both growth in the value of, and income from, its investments. The Fund invests mainly in a portfolio of bonds of all types from issuers around the world, including emerging markets. The Fund’s investment strategy provides that the Fund’s investment objective may be realized by investing in underlying bond funds.

11. From time to time the Fund invests in Société d'investissement à Capital Variable (SICAV Funds) domiciled in Europe. As at December 31, 2020, the Fund had 40% of its assets invested in four related SICAV Funds managed by T. Rowe Price (Luxembourg) and domiciled in Luxembourg: T. Rowe Price Funds SICAV – Diversified Income Bond Fund, T. Rowe Price Funds SICAV – Emerging Markets Corporate Bond Fund, T. Rowe Price Funds SICAV – Global High Yield Bond Fund and T. Rowe Price Funds SICAV – Global Investment Grade Corporate Bond Fund.

12. The Filer believes that investing in the SICAV Funds offers benefits not available through a direct investment in the companies, other issuer or assets held by the SICAV Funds.

13. Securities of the SICAV Funds are typically redeemable daily. The Fund is able to manage its own liquidity requirements taking into consideration the frequency at which the securities of the SICAV Funds may be redeemed.

14. The net asset value of the Fund (“NAV”) is calculated in accordance with the trust agreement. Investors of the Fund are provided with NAV on a daily basis.

Financial Statement Filing and Delivery Requirements

15. Section 2.2 and paragraph 5.1(2)(a) of NI 81-106 require the Fund to file and deliver its audited annual financial statements by the Annual Filing Deadline. As the Fund’s financial year-end is December 31, it has a delivery deadline of March 31.

16. Section 2.11 of NI 81-106 provides an exemption (the Filing Exemption) from the Annual Filing Deadline to a mutual fund that is not a reporting issuer if, among other things, the fund delivers its annual financial statements to its securityholders in accordance with Part 5 of NI 81-106 by the Annual Filing Deadline.

17. In order to formulate an opinion on the financial statements of the Fund, the Fund’s auditors require audited financial statements of the SICAV Funds. The auditors of the Fund have advised the Filer that they will be unable to complete the audit of the Fund’s annual financial statements until the audited financial statements of the SICAV Funds are completed and available to the Fund.

18. The SICAV Funds have the same financial year-end as the Fund but are subject to a different financial reporting deadline than the Fund. Specifically, the SICAV Funds are governed by laws that require the financial statements to be filed within 120 days of the financial year end of the SICAV Funds. Under the trust agreement, the Fund must deliver financial statements to investors within 90 days of the financial year end.

19. The Fund will not be able to obtain the financial statements of the SICAV Funds sooner than the March 31 deadline for delivering the financial statements of the Fund and no sooner than other unitholders of the SICAV Funds receive the financial statements.

20. The Filer does not anticipate that it will be able to rely on the Filing Exemption since it is unable to prepare and deliver the audited annual financial statements and auditor’s report by the Annual Filing Deadline and is accordingly unable to satisfy the requirement in paragraph 2.11(b) of the Filing Exemption.

21. The Fund has a sole Fund Securityholder of substantial size and sophistication. The Filer has communicated the expected delay in delivery of the audited annual financial statements to the Fund Securityholder and the Fund Securityholder has not expressed any concerns with such delay.

22. The added cost associated with having the SICAV Funds provide their financial statements at an earlier date outweigh the expected benefit to the Fund Securityholder.

23. If the Filer expects it will continue to hold material investments in the SICAV Funds and will distribute securities of the Fund to investors other than the Fund Securityholder, the Filer will amend the offering memorandum of the Fund to disclose to investors that the audited annual financial statements for the Fund will be delivered within 180 days of financial year end, in reliance on the relief from the Annual Delivery Requirement granted under this decision.

24. The Filer will notify the Fund Securityholder that it has received and intends to rely on relief from the Annual Filing Deadline and Annual Delivery Requirement.

25. The Fund seeks an extension of the Annual Filing Deadline and Annual Delivery Requirement to June 30 of each year, to enable the Fund’s auditors to first receive the audited financial statements of the SICAV Funds so as to be able to prepare the Fund’s annual audited financial statements.

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 Relief Sought is granted provided that:

1. The Fund has a financial year ended December 31;

2. The Fund’s investment strategy provides that the Fund’s investment objective may be realized by investing in underlying bond funds, such as the SICAV Funds, domiciled in Europe (the Underlying Funds);

3. No less than 25% of the total assets of the Fund, at the time the Fund makes the initial investment decision in the Underlying Funds, are invested in investment entities that have financial reporting periods that end on December 31 of each year and are subject to laws of their jurisdictions that require their financial statements to be delivered within 120 days of their financial year ends.

4. On behalf of the Fund, within 60 days of the date hereof, the Filer will notify the Fund Securityholder that the Fund has received and intends to rely on relief from the Annual Filing Deadline and Annual Delivery Requirement;

5. If the Filer distributes securities of the Fund to investors other than the Fund Securityholder after the date of this decision, the Filer will immediately amend the offering memorandum of the Fund to disclose to investors that the annual financial statements for the Fund will be delivered within 180 days of the Fund’s most recently completed financial year.

6. The Fund is not a reporting issuer and the Filer has the necessary registrations to carry out its operations in each jurisdiction of Canada in which it operates;

7. a) The audited annual financial statements of the Fund are filed on or before the 180^th^

day after the Fund’s most recently completed financial year; or

b) the conditions in section 2.11 of NI 81-106 are met, except for paragraph 2.11(b), and the audited annual financial statements are delivered to securityholders of the Fund in accordance with Part 5 of NI 81-106 on or before the 180th day after the Fund’s most recently completed financial year; and

8. The decision terminates within one year of the coming into force of any amendment to NI 81-106 or other rule that modifies how the Annual Filing Deadline or Annual Delivery Requirement applies in connection with mutual funds under the Legislation.

“Neeti Varma”

Neeti Varma

Manager, Investment Funds and Structured Products Branch

Ontario Securities Commission

App. No. 2021/0134