Guardian Capital LP and the Funds listed in Schedule A
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted under subsection 62(5) of the Securities Act to permit an extension of a prospectus lapse date by 98-days in order to facilitate the incorporation of audited annual financial statements in the filing of the renewal prospectus documents so as to not incur the costs associated with a review of the unaudited interim financial statements -- no conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).
November 17, 2022
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 GUARDIAN CAPITAL LP (the Filer or Manager) AND IN THE MATTER OF THE FUNDS LISTED IN SCHEDULE A (EACH A FUND, COLLECTIVELY THE FUNDS)
The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of the Funds, for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the time limit for the renewal of the simplified prospectus of the Funds dated January 6, 2022 (the Prospectus) be extended to the time limit that would apply if the lapse date of the Prospectus was April 14, 2023 (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(i) the Ontario Securities Commission is the principal regulator for this application; and
(ii) 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).
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is an Ontario limited partnership. The general partner of the Filer is Guardian Capital Inc., an Ontario corporation. The Filer's head office is located in Toronto, Ontario.
2. The Filer is registered as a portfolio manager and an exempt market dealer in each province of Canada, an investment fund manager in each of Ontario, Québec, and Newfoundland and Labrador, and a commodity trading manager and a commodity trading counsel in Ontario. The Filer is the investment fund manager of the Funds.
3. Each Fund is a mutual fund for purposes of National Instrument 81-102 Investment Funds established as a trust under the laws of the Province of Ontario, and is a reporting issuer as defined in the securities legislation of each of the Jurisdictions.
4. Neither the Filer nor any of the Funds are in default of securities legislation in any of the Jurisdictions.
5. The Funds currently distribute securities in the Jurisdictions under the Prospectus.
6. Pursuant to subsection 62(1) of the Securities Act (Ontario) (the Act), the lapse date of the Prospectus is January 6, 2023 (the Lapse Date). Accordingly, under subsection 62(2) of the Act, the distribution of securities of each of the Funds would have to cease on the Lapse Date unless: (i) the Funds file a pro forma prospectus at least 30 days prior to the Lapse Date; (ii) the final prospectus is filed no later than 10 days after the Lapse Date; and (iii) a receipt for the final prospectus is obtained within 20 days of the Lapse Date.
7. The fiscal year-end of each of the Funds is December 31 and, pursuant to section 2.2 of National Instrument 81-106 Investment Fund Continuous Disclosure, the annual financial statements and auditor's report are required to be filed on or before the 90th day after each Fund's most recently completed financial year, which for each of the Funds will be its first financial year-end of December 31, 2022 (the 2022 Fiscal Year-End).
8. It is expected each Fund will receive the written consent of its auditor at the same time that the financial statements and auditor's report for the 2022 Fiscal Year-End are issued, which is expected to occur on or about March 30, 2023.
9. As audited financial statements will not be ready by the Lapse Date, the Funds will need to incorporate by reference unaudited interim financial information into their final simplified prospectus. In accordance with section 3.1.2 of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101), in order to incorporate by reference the interim unaudited financial statements into the Funds' final simplified prospectus, those interim unaudited financial statements must be reviewed by the Funds' auditor in accordance with the relevant standards set out in the Handbook of the Canadian Institute of Chartered Accountants for a review of financial statements.
10. Accordingly, if the Exemption Sought is not granted, the Funds' auditor will be required to review each of the Funds' interim financial statements. In doing so, additional costs will be incurred by the Manager and these costs will recur annually.
11. Rather than facing this audit challenge each year, it would be more efficient and cost effective to extend the Lapse Date to April 14, 2023. This extension will provide the time necessary for the auditor to complete the audit of each of the Funds' financial statements for the 2022 Fiscal Year-End, and for the Manager to prepare and file the final prospectus and fund facts, along with the written consent of the auditor, as required by NI 81-101.
12. In addition, the extension of the Lapse Date would provide the Filer with additional time to prepare certain year-over-year performance data based on the audited annual financial statements each year, which would help to ensure that investors receive more accurate information on the performance of each of the Funds.
13. There have been no material changes in the affairs of the Funds since the date of the Prospectus. Accordingly, the Prospectus and current fund facts of the Funds represents current information regarding the Funds.
14. Given the disclosure obligations of the Funds, should a material change in the affairs of any of the Funds occur, the Prospectus and current fund facts document(s) of the applicable Fund(s) will be amended as required under the Legislation.
15. New investors in the Funds will receive delivery of the most recently filed fund facts document(s) of the applicable Fund(s). The Prospectus will still be available upon request.
16. The Exemption Sought will not affect the accuracy of the information contained in the Prospectus or fund facts document(s) and will therefore not be prejudicial to the public interest.
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.