May 26, 2026
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
MADISON INVESTMENTS (CANADA) LTD. (the Filer)
AND
IN THE MATTER OF MADISON US LARGE CAP ETF AND MADISON US MID CAP ETF (the Proposed Funds)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Proposed Funds and such other mutual funds established in the future that will be managed by the Filer or by an affiliate of the Filer, and to which National Instrument 81-102 Investment Funds (NI 81-102) applies (collectively, the Funds, and each, a Fund) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting each Fund from the following provisions of NI 81-102 to permit the Funds to invest in securities of existing and future exchange-traded funds that are not index participation units (IPUs, and each, an IPU) and whose securities are, or will be, listed for trading on a stock exchange in the United States (the Underlying ETFs, and each, an Underlying ETF):
(i) paragraph 2.5(2)(a) to permit each Fund to purchase and/or hold securities of an Underlying ETF even though the Underlying ETF is not subject to NI 81-102; and
(ii) paragraph 2.5(2)(c) to permit each Fund to purchase and/or hold securities of an Underlying ETF even though the Underlying ETF is not a reporting issuer in any province of territory of Canada
(collectively, 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 each of the other provinces and territories of Canada (together with Ontario, the Jurisdictions, and each, a Jurisdiction).
Interpretation
Terms defined in MI 11-102, NI 81-102, National Instrument 14-101 Definitions and National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) have the same meaning if used in this decision, unless otherwise defined.
Representations
The Filer
The Filer is a corporation organized under the laws of the Province of Ontario. The head office of the Filer is located in Toronto, Ontario.
The Filer is registered as: (i) a portfolio manager in Ontario, and (ii) an investment fund manager in Ontario, Newfoundland and Labrador and Quebec.
The Filer or an affiliate of the Filer is, or will be, the manager of the Funds.
The Filer is not in default of securities legislation in any of the Jurisdictions.
The Funds
Each Fund is, or will be, an investment fund organized and governed by the laws of a Jurisdiction.
Each Fund is, or will be, governed by the applicable provisions of NI 81-102, subject to any exemptions therefrom that have been, or may in the future be, granted by the securities regulatory authorities.
The Filer will file a final long form prospectus for a Fund, prepared and filed in accordance with National Instrument 41-101 General Prospectus Requirements, subject to any exemptions that may be granted by the applicable securities regulatory authorities.
Each Fund is, or will be, a reporting issuer in the Jurisdiction(s) in which its securities are distributed.
Each Fund is, or will be, subject to NI 81-107.
The Funds may, from time to time, seek to invest in Underlying ETFs.
The Underlying ETFs
- The securities of an Underlying ETF will not meet the definition of an IPU in NI 81-102 because the purpose of such Underlying ETF will not be to:
(a) hold the securities that are included in a specified widely quoted market index in substantially the same proportion as those securities are reflected in that index; or
(b) invest in a manner that causes the Underlying ETF to replicate the performance of that index.
The securities of an Underlying ETF are, or will be, listed on a United States exchange registered with the Securities and Exchange Commission (SEC) as a “national securities exchange” under section 6(a) of the Securities Exchange Act of 1934 (a Recognized Exchange). The market for these securities is, or will be, liquid because it is, or will be, supported by designated brokers. As a result, the Filer expects a Fund to be able to dispose of such securities through market facilities in order to raise cash, including to fund the redemption requests of its securityholders.
An Underlying ETF may be managed by the Filer or an affiliate or associate of the Filer, or by a third-party investment fund manager.
An investment in an Underlying ETF by a Fund will otherwise comply with section 2.5 of NI 81-102, including that:
(a) no Underlying ETF will hold more than 10% of its net asset value (NAV) in securities of another investment fund unless the Underlying ETF (a) is a clone fund, as defined in NI 81-102, or (b) in accordance with NI 81-102, purchases or holds securities (i) of a money market fund, as defined in NI 81-102, or (ii) that are IPUs issued by an investment fund; and
(b) no Fund will pay management or incentive fees which to a reasonable person would duplicate a fee payable by an Underlying ETF for the same service.
Each Underlying ETF is, or will be, an “investment fund” and “mutual fund” within the meaning of applicable Canadian securities legislation.
Absent the Exemption Sought, an investment by a Fund in an Underlying ETF would:
(a) be prohibited by paragraph 2.5(2)(a) of NI 81-102 because such Underlying ETF may not be subject to NI 81-102;
(b) be prohibited by paragraph 2.5(2)(c) of NI 81-102 because such Underlying ETF may not be a reporting issuer in any Jurisdiction; and
(c) not qualify for the exception in paragraph 2.5(3)(a) of NI 81-102 because the securities of the Underlying ETF are not IPUs.
The Filer submits that having the option to allocate a limited portion of a Fund’s assets to one or more Underlying ETFs will increase diversification opportunities and may improve the Fund’s overall risk/reward profile.
An investment in an Underlying ETF by a Fund is an efficient and cost-effective alternative to obtaining exposure to securities held by the Underlying ETF rather than purchasing those securities directly by the Fund.
An investment in an Underlying ETF by a Fund should pose limited investment risk to the Fund because each Underlying ETF will be subject to the United States Investment Company Act of 1940 (Investment Company Act), subject to any exemption therefrom that is or may in the future be granted by the applicable securities regulatory authorities.
The requirements and industry standards relating to reporting, fund governance and investment restrictions in the United States applicable to Underlying ETFs are comparable to those under applicable securities laws in the Jurisdictions.
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 provided that:
(a) the investment by a Fund in securities of an Underlying ETF is in accordance with the investment objective of the Fund;
(b) a Fund does not purchase securities of an Underlying ETF if, immediately after the purchase, more than 10% of the NAV of the Fund, in aggregate, taken at market value at the time of the purchase, would consist of securities of Underlying ETFs;
(c) securities of each Underlying ETF are listed on a Recognized Exchange;
(d) each Underlying ETF is, immediately before the purchase by a Fund of securities of that Underlying ETF, an investment company subject to the Investment Company Act in good standing with the SEC; and
(e) the prospectus of each Fund discloses, or will disclose in the next renewal of its prospectus following the date of this decision, in the investment strategy section, the fact that the Fund has obtained the Exemption Sought to permit investments in Underlying ETFs on the terms described in this decision.
“Darren McKall”
Darren McKall, Associate Vice President
Investment Management Division
Ontario Securities Commission
Application No. 2026-90
SEDAR+ No. 6398874