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3iQ Corp. et al.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted for extension of lapse date of prospectus -- Filer inadvertently failed to file a pro forma prospectus not less than thirty days prior to the lapse date as required by the legislation -- Lapse date extended by 30 days -- No conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).
March 27, 2023
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 3iQ CORP. (the Filer) AND IN THE MATTER OF 3iQ COINSHARES BITCOIN ETF 3iQ COINSHARES ETHER ETF (collectively, the ETFs)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of the ETFs, for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the time limits for the renewal of the prospectus of the ETFs dated March 31, 2022 be extended to those time limits that would apply if the lapse date of the prospectus of the ETFs was April 30, 2023 (the Requested Relief).
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).
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:
1. The Filer is a corporation incorporated under the laws of Canada, with its registered office located Toronto, Ontario.
2. The Filer is registered as (a) a portfolio manager, investment fund manager and exempt market dealer in Alberta and Quebec, (b) a portfolio manager and exempt market dealer in British Columbia, (c) an exempt market dealer in Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, and Saskatchewan, (d) an exempt market dealer and investment fund manager in Newfoundland and Labrador, and (e) a commodity trading manager, exempt market dealer, portfolio manager and investment fund manager in Ontario.
3. The Filer is the investment fund manager and trustee of the ETFs.
4. Neither the Filer nor the ETFs are in default of securities legislation in any of the Jurisdictions.
5. The ETFs are reporting issuers under the laws of the Jurisdictions and are open-ended alternative mutual fund trusts subject to National Instrument 81-102 Investment Funds.
6. The ETFs invest in the digital currency bitcoin and ether, as indicated by their respective names.
7. Securities of the ETFs are currently qualified for distribution in each of the Jurisdictions under a long form prospectus dated March 31, 2022 (the Current Prospectus).
8. The ETFs are in continuous distribution and the securities of each of the ETFs are listed on the Toronto Stock Exchange.
9. The lapse date for the Current Prospectus under the Legislation is March 31, 2023 (the Current Lapse Date).
10. Accordingly, under the Legislation, the distribution of securities of the ETFs would have to cease on the Current Lapse Date unless: (i) the ETFs file a pro forma prospectus at least 30 days prior to the Current Lapse Date; (ii) the final prospectus of the ETFs is filed no later than 10 days after the Current Lapse Date; and (iii) a receipt for the final prospectus of the ETFs is obtained within 20 days after the Current Lapse Date.
11. As a result of recent organizational changes, including changes in the Filer's outside law firm and Chief Compliance Officer, along with other changes since the date of the Current Prospectus, the Filer has inadvertently filed its pro forma prospectus after the 30-day period prior to the Current Lapse Date.
12. The Filer desires to extend the Current Lapse Date of the Current Prospectus in order to allow it to comply with the Legislation.
13. If the Requested Relief is not granted, the potential effect on the capital markets is likely to be disproportionately prejudicial, given recent events in the broader digital asset marketplace. In addition, investors and securityholders of the ETFs would not be prejudiced by the Requested Relief.
14. There have been no material changes in the affairs of the ETFs since the date of the Current Prospectus, except for the amendment to the Current Prospectus dated October 21, 2022, which was duly filed. Accordingly, the Current Prospectus and current ETF facts document of each ETF represent current information regarding such ETFs.
15. Given the disclosure obligations of the Filer and the ETFs, should any material change occur, the Current Prospectus and current ETF facts will be amended as required under the Legislation.
16. New investors of the ETFs will receive delivery of the most recently filed ETF facts. The Current Prospectus will remain available to investors upon request.
17. The Requested Relief will not affect the accuracy of the information contained in the Current Prospectus or the respective ETF facts and therefore will 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 Requested Relief is granted.
"Darren McKall"
Manager, Investment Funds and Structured Products
Ontario Securities Commission
Application File #: 2023/0123