Horizons ETFS Management (Canada) Inc. and the Funds Listed in Schedule A

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted under subsection 62(5) of the Securities Act to extend the lapse dates of prospectuses of ETFs in continuous distribution by 76 days, 83 days and 35 days -- Extension of lapse dates granted to facilitate incorporation by reference of audited annual financial information into ETFs' renewal prospectus and avoid costs associated with a review of the ETFs' unaudited interim financial statements, and enable ETFs offered under separate prospectuses to be combined into one prospectus -- Extensions of lapse dates will not affect the currency or accuracy of the information contained in the current prospectuses -- No conditions to the relief.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).

December 5, 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 HORIZONS ETFS MANAGEMENT (CANADA) INC. (the Filer) AND IN THE MATTER OF THE FUNDS LISTED IN SCHEDULE A (EACH A FUND, COLLECTIVELY THE FUNDS)

DECISION

Background

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 (the Legislation) that the respective time limits for the renewal of the long form prospectus of the Active ETFs (as defined in Schedule A) dated February 11, 2022 (the Active Prospectus), the long form prospectus of the Index ETFs (as defined in Schedule A) dated May 9, 2022 (the Index Prospectus) and the long form prospectus of the Thematics Plus ETFs (as defined in Schedule A) dated June 27, 2022 (the Thematics Plus Prospectus and, together with the Active Prospectus and the Index Prospectus, the Prospectuses) be extended to those time limits that would apply if the lapse dates of the Prospectuses were April 28, 2023 (in the case of the Active Prospectus) and July 31, 2023 (in the case of the Index Prospectus and the Thematics Plus Prospectus) (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).

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. The Filer's head office is located in Toronto, Ontario.

2. The Filer is registered as a portfolio manager in Alberta, British Columbia, Ontario and Québec, an exempt market dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan, a commodity trading manager and a commodity trading adviser in Ontario and an investment fund manager in each of Ontario, Québec and Newfoundland and Labrador.

3. The Filer is the investment fund manager of the Funds.

4. Each of the Funds is an exchange-traded mutual fund (ETF) established under the laws of Ontario, and is a reporting issuer as defined in the securities legislation of each of the Jurisdictions.

5. Neither the Filer nor any of the Funds are in default of securities legislation in any of the Jurisdictions.

6. The Funds currently distribute securities in the Jurisdictions under the Prospectuses. Securities of each of the Funds trade on the Toronto Stock Exchange.

7. Pursuant to subsection 62(1) of the Securities Act (Ontario) (the Act), the lapse dates of the Active Prospectus, the Index Prospectus and the Thematics Plus Prospectus are February 11, 2023, May 9, 2023 and June 27, 2023, respectively (each a Lapse Date, and collectively, the Lapse Dates). Accordingly, under subsection 62(2) of the Act, the distribution of securities of each of the Funds would have to cease on the applicable Lapse Date unless: (i) each of the Funds files a pro forma prospectus at least 30 days prior to the applicable Lapse Date; (ii) the final prospectus is filed no later than 10 days after the applicable Lapse Date; and (iii) a receipt for the final prospectus is obtained within 20 days of the applicable Lapse Date.

8. The fiscal year-end of each of the Active ETFs 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 90^th day after each Active ETF's most recently completed financial year, which for each of the Active ETFs will be its financial year-end of December 31, 2022 (the 2022 Fiscal Year-End).

9. It is expected each Active ETF 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.

10. As audited financial statements will not be ready by the Lapse Date of the Active Prospectus, the Active ETFs will be required to incorporate by reference unaudited interim financial information into their renewal prospectus. In accordance with subsection 4.3(1) of National Instrument 41-101 General Prospectus Requirements (NI 41-101), the Active ETFs' auditor will be required to review each of the Active ETFs' interim financial statements in accordance with the relevant standards set out in the Handbook of the Canadian Institute of Chartered Accountants for a review of financial statements. In doing so, additional costs will be incurred by the Active ETFs and these costs will recur annually. This is not in the best interest of the Active ETFs' investors.

11. In addition, in the absence of audited financial statements, key data such as each Active ETF's updated management expense ratio will not be available at the time of renewal, so the renewal documents will not contain all the updated information that will be available after the audit.

12. Rather than facing this audit challenge each year and placing an unnecessary financial burden on the Active ETFs and indirectly onto the Active ETFs' investors, it would be more efficient and cost effective to extend the Lapse Date of the Active Prospectus to April 28, 2023. This extension will provide the time necessary for the auditor to complete the audit of each of the Active ETFs' financial statements for the 2022 Fiscal Year-End, and file the final prospectus and ETF facts, along with the written consent of the auditor, as required by NI 41-101.

13. The Filer wishes to combine the Index Prospectus with the Thematics Plus Prospectus, as well as extend the Lapse Date of the Thematics Plus Prospectus from June 27, 2023 to July 31, 2023, in order to reduce renewal, service provider, printing and related costs of the Index ETFs and the Thematics Plus ETFs.

14. Offering the Index ETFs and the Thematics Plus ETFs under one prospectus would facilitate the distribution of the Index ETFs in the Jurisdictions under the same prospectus and enable the Filer to streamline disclosure across the Filer's fund platform. As the Index ETFs and the Thematics Plus ETFs are all managed by the Filer and have similar features, offering them under one prospectus (as opposed to two) will allow investors to more easily compare their features. In addition, extending the Lapse Date of the Thematics Plus Prospectus to July 31, 2023 will better align the renewal of that Prospectus with the availability of quarterly portfolio disclosure produced by the Funds' service providers and avoid costs that may be charged by those service providers for any data requests made outside of 60 days after the end of a quarter.

15. It would be unreasonable to incur the costs and expenses associated with preparing two separate renewal prospectuses given how close in proximity the Lapse Dates are to one another.

16. There have been no material changes in the affairs of each Fund since the date of the applicable Prospectus, other than those for which amendments have been filed, as applicable. Accordingly, the Prospectus and current ETF facts document of each Fund represent current information regarding such Fund.

17. Given the disclosure obligations of the Funds, should a material change in the affairs of any of the Funds occur, the Prospectus and current ETF facts document(s) of the applicable Fund(s) will be amended as required under the Legislation.

18. New investors in the Funds will receive the most recently filed ETF facts document(s) of the applicable Fund(s). The Prospectuses will still be available upon request.

19. The Exemption Sought will not affect the accuracy of the information contained in the Prospectus and ETF facts document(s) of each Fund and will therefore 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 Exemption Sought is granted.

Schedule "A"

The Active ETFs

(each, an "Active ETF" and collectively, the "Active ETFs")

The Index ETFs

(each, an "Index ETF" and collectively, the "Index ETFs")

The Thematics Plus ETFs

(each, a "Thematics Plus ETF " and collectively, the "Thematics Plus ETFs")