February 23, 2024
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
Ridgewood Capital Asset Management Inc.
(the Filer)
AND
Ridgewood Canadian Investment Grade Bond Fund
(the Initial Alternative Fund)
AND
THE alternative mutual fundS established in the future and managed by the Filer or an affiliate of the Filer
(the Future Alternative Funds, and together with the Initial Alternative Fund, the Alternative Funds)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Alternative Funds for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that grants relief to the Alternative 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 (SP) for an alternative mutual fund must not be consolidated with a SP of another mutual fund if the other mutual fund is not an alternative mutual fund in order to permit SP(s) for one or more Alternative Funds to be consolidated with the SP(s) of one or more mutual funds existing today or created in the future (i) that are reporting issuers to which NI 81-101 and National Instrument 81-102 Investment Funds (NI 81-102) apply, (ii) that are not alternative mutual funds, and (iii) for which the Filer, or an affiliate of the Filer, acts as the investment fund manager (the Conventional Funds, and together with the Alternative Funds, the Funds) (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, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, Northwest Territories, Yukon Territory and Nunavut (together with Ontario, the Canadian Jurisdictions).
Interpretation
Terms defined in National Instrument 14-101 Definitions, MI 11-102 and NI 81-102.
Representations
This decision is based on the following facts represented by the Filer:
The Filer
The Filer is a corporation incorporated under the laws of Canada with its head office located in Toronto, Ontario.
The Filer currently is registered under the securities legislation in:
(a) each Jurisdiction and Québec in the category of portfolio manager;
(b) each Jurisdiction in the category of mutual fund dealer;
(c) Québec, Ontario, Newfoundland and Labrador in the category of investment fund manager; and
(d) Ontario and Newfoundland and Labrador as an exempt market dealer.
The Filer, or an affiliate of the Filer, is, or will be, the investment fund manager of each Fund.
The Filer is not in default of the securities legislation in any of the Canadian Jurisdictions.
The Funds
Each Alternative Fund is, or will be, established under the laws of Ontario or Canada as an alternative mutual fund that is a trust or a class of shares of a mutual fund corporation and is, or will be, a reporting issuer in one or more of the Canadian Jurisdictions.
Each Conventional Fund is not, or will not be, an alternative mutual fund.
It is expected that the Filer will file a preliminary prospectus on behalf of the Initial Alternative Fund with the securities regulatory authority in each of the Canadian Jurisdictions by (on or about) February 16, 2024.
The Initial Alternative Fund is not in default of the securities legislation in any of the Canadian Jurisdictions.
The name of the Initial Alternative Fund may be changed by the Filer at its sole discretion.
The securities of each Fund are, or will be, qualified for distribution in one or more of the Canadian Jurisdictions using a SP, fund facts and/or ETF facts document(s) prepared and filed in accordance with the securities legislation of such Canadian Jurisdictions.
If an Alternative Fund offers both securities which are listed on a stock exchange and securities which are not listed on a stock exchange, the Alternative Fund will have received permission to distribute such securities using a SP rather than a long form prospectus pursuant to National Instrument 41-101 General Prospectus Requirements (NI 41-101).
Reasons for the Exemption Sought
The Filer wishes to combine the SP(s) for one or more Alternative Funds with the SP(s) of one or more Conventional Funds in order to reduce renewal, printing and related costs. Offering the Alternative Funds using the same SP as the Conventional Funds would facilitate the distribution of the Alternative Funds in the Canadian Jurisdictions under the same prospectus disclosure and enable the Filer to streamline disclosure across the Filer’s fund platform.
Even though the Alternative Funds are, or will be, alternative mutual funds, they share, or will share, many common operational and administrative features with the Conventional Funds and combining them in the same SP will allow investors to more easily compare the features of the Alternative Funds and the Conventional Funds.
Investors will receive the fund facts and/or ETF facts document(s), as applicable, when purchasing securities of the Alternative Funds or Conventional Funds as required by applicable securities legislation. The form and content of the fund facts and ETF facts document(s) of the Alternative Funds and Conventional Funds will not change as a result of the Exemption Sought. The SP of the Alternative Funds and Conventional Funds will continue to be provided to investors, upon request, as required by applicable securities legislation.
NI 41-101 does not contain a provision equivalent 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 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.
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 is that the Exemption Sought is granted.
“Darren McKall”
Darren McKall
Investment Funds and Structured Products
Ontario Securities Commission
Application # 2024/0074
SEDAR+ # 6082619