Prospectus offerings for investment funds in Ontario

An investment fund that wants to distribute its securities to the public in Ontario is required to file a prospectus. The prospectus contains key information about the investment fund and the securities offered.

Prospectus filing process

An investment fund that is required to file a prospectus in Ontario must begin by filing a preliminary prospectus with the Ontario Securities Commission (OSC).

The OSC reviews, provides comments, and may ask for changes to the preliminary prospectus. The investment fund must then make changes to the prospectus to the satisfaction of the OSC.

Once this process is completed, the investment fund must file a final prospectus.

If a receipt is issued for the final prospectus, the investment fund can then use the prospectus to offer securities to the public. Once a receipt is issued for the final prospectus, the investment fund becomes a reporting issuer in Ontario, and is subject to ongoing investment fund reporting issuer obligations

An investment fund can distribute its securities under its prospectus for up to 12 months. After 12 months, the prospectus lapses. If an investment fund wishes to continue offering securities under its prospectus after 12 months, it can renew the prospectus for an additional 12 months, provided certain conditions are met.

Parts XV and XVI of Ontario’s Securities Act include requirements relating to time limits and delivery obligations for a prospectus.

Types of prospectuses

There are two main types of prospectuses for investment funds: the simplified prospectus (SP), and the long form prospectus.

The type of prospectus that is required to be filed depends on the type of investment fund that is offering securities.

A mutual fund that is not an exchange-traded mutual fund (an ETF) must file an SP. This includes alternative mutual funds that are not structured as ETFs.

All other investment funds (including ETFs) must file a long form prospectus.

Depending on the type of investment fund and prospectus, certain other disclosure documents may also be required to be filed along with the prospectus.

Content

Required documents for a simplified prospectus

National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) sets out the prospectus requirements for a mutual fund (other than an ETF). In order to sell its securities to the public, a mutual fund (other than an ETF) is required to prepare and file:

Prior to January 6, 2022, a mutual fund (other than an ETF) was also required to prepare and file an annual information form (AIF) in the form set out in Form 81-101F2 Contents of Annual Information Form (Form 81-101F2). Requirements from Form 81-101F2 were incorporated into an updated version of Form 81-101F1 that came into force on January 6, 2022.

During a transition period, some funds were permitted to file both an SP and an AIF (using the old versions of the relevant forms). While that transition period is now over, filings of both an AIF and an SP may still be permitted in certain circumstances involving prospectus amendments. It is anticipated, however, that on or after September 6, 2023, renewal prospectus and prospectus amendment filings for a mutual fund (other than an ETF) will exclusively be in the form of an SP prepared in the current form of Form 81-101F1 (that came into force on January 6, 2022), without an accompanying AIF.

NI 81-101 also sets out other requirements for mutual fund prospectus offerings, covering areas such as required supporting documents, prospectus amendments, incorporation by reference of specified documents, delivery to securityholders, language and presentation, packaging, and certificates.

Content

Required documents for a long-form prospectus

National Instrument 41-101 General Prospectus Requirements (NI 41-101) sets out the prospectus requirements for an investment fund that is not required to use an SP (such as ETFs and non-redeemable investment funds). In order to sell its securities to the public, an investment fund that is not required to use an SP is required to prepare and file a long form prospectus, in the form of:

In addition to a long form prospectus, an ETF is also required to prepare and file an ETF Facts document for every class or series of the ETF, in the form set out in Form 41-101F4 Information Required in an ETF Facts Document.

NI 41-101 also sets out other requirements for investment fund prospectus offerings (for funds that are not required to use an SP), covering areas such as required supporting documents, prospectus amendments, incorporation by reference of specified documents, delivery to securityholders, and certificates.

Content

An investment fund that is not required to use an SP and that is already a reporting issuer in a Canadian jurisdiction may be eligible to use a short form prospectus to issue additional securities rather than use a long form prospectus.

A short form prospectus allows existing reporting issuers to use a simplified form of the long form prospectus for a specific offering of securities. It allows existing reporting issuers to incorporate by reference into the short form prospectus certain other disclosure about the investment fund.

Selling securities in other Canadian jurisdictions

If an investment fund wants to sell securities in other provinces or territories in Canada, it must also comply with the laws of those jurisdictions. National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions outlines the filing and review process for prospectuses filed in multiple jurisdictions.

Exempt distributions

In certain cases, investment funds may distribute securities without a prospectus.