National Bank Investment Inc. et al.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted to mutual funds for extension of the lapse date of prospectus -- Extension will permit filer to include annual audited financial statements when prospectus is renewed -- Extension of lapse date will not affect the currency or accuracy of the information contained in the current prospectus.

Applicable Legislative Provisions

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

September 24, 2020

IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF NATIONAL BANK INVESTMENT INC. (the Filer) AND IN THE MATTER OF NBI GLOBAL REAL ASSETS INCOME ETF, NBI ACTIVE CANADIAN PREFERRED SHARES ETF, NBI UNCONSTRAINED FIXED INCOME ETF, NBI HIGH YIELD BOND ETF, NBI SUSTAINABLE CANADIAN BOND ETF, NBI SUSTAINABLE CANADIAN EQUITY ETF, NBI SUSTAINABLE GLOBAL EQUITY ETF, NBI CANADIAN FAMILY ETF AND NBI GLOBAL PRIVATE EQUITY ETF (collectively, the Non-Alternative NBI ETFs) AND IN THE MATTER OF NBI LIQUID ALTERNATIVES ETF (the Alternative NBI ETF and, together with the Non-Alternative NBI ETFs, collectively the NBI ETFs, each a NBI ETF)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application from the Filer on behalf the NBI ETFs for a decision under the securities legislation of the Jurisdictions (the Legislation) to permit the NBI ETFs to extend the time limits for the renewal of both the Non-Alternative NBI ETFs and the Alternative NBI ETF Prospectuses (collectively defined as the Prospectus) as if its lapse date was April 23, 2021 (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Autorité des marchés financiers is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4.7(1) of Regulation 11-102 respecting Passport System (c. V-1.1, r. 1) (Regulation 11-102) is intended to be relied upon in the jurisdictions of Canada other than the Jurisdictions; and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions (c. V-1.1, r. 3), Regulation 11-102, Regulation 41-101 respecting General Prospectus Requirements (c. V-1.1, r.14) (Regulation 41-101), Regulation 81-102 respecting Investment Funds (c. V-1.1, r. 39) (Regulation 81-102) and Regulation 81-106 respecting Investment Fund Continuous Disclosure (c. V-1.1, r. 42) (Regulation 81-106) 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:

The Filer

1. The Filer is a corporation amalgamated under the laws of Canada with its head office in Québec.

2. The Filer is registered as an investment fund manager in Québec, Ontario and Newfoundland and Labrador and as a mutual fund dealer in each of the jurisdiction of Canada.

3. The Filer is the investment fund manager of the NBI ETFs.

4. The Filer is not in default of securities legislation in any of the jurisdiction of Canada.

The NBI ETFs

5. Each NBI ETF is a mutual fund governed by the provisions of Regulation 81-102 and established under the laws of Ontario.

6. Securities of each NBI ETF are offered by long form prospectuses dated January 23, 2020 and prepared pursuant to Regulation 41-101 and Form 41-101F2 Information Required in an Investment Fund Prospectus, which are filed in one or more jurisdiction of Canada. Accordingly, each NBI ETF is a reporting issuer or the equivalent in one or more jurisdiction of Canada.

7. The NBI ETFs are not in default of securities legislation in any of the jurisdiction of Canada.

8. Pursuant to section 62(1) of the Securities Act (Ontario) (R.S.O. 1990, c. S.5) and section 17(2) of Regulation 41-101, the lapse date for the Prospectus is January 23, 2021 (the Current Lapse Date). In accordance with applicable securities legislation, the distribution of securities of NBI ETFs would have to cease on the Current Lapse Date unless (i) a pro forma prospectus is delivered not less than 30 days before the Current Lapse Date (i.e. by December 24, 2020); (ii) a final prospectus is filed no later than 10 days after the Current Lapse Date (i.e. by February 2, 2021); and (iii) a receipt for such final prospectus is obtained within 20 days of the Current Lapse Date (i.e. February 12, 2021).

9. Pursuant to sections 10.1(1), 10.1(1.1) and 10.1(2) of Regulation 41-101, the NBI ETFs must file a written consent provided by their auditor no later than February 2, 2021, 10 days after the Current Lapse Date.

10. The fiscal year-end of the NBI ETFs is December 31 and, pursuant to section 2.2 of Regulation 81-106, the annual financial statements and auditor's report are required to be filed on or before the 90th day after the NBI ETFs' most recently completed financial year, which for the NBI ETFs will be December 31, 2020 (the 2020 Fiscal Year-End).

11. Pursuant to section 4.3(1) of Regulation 41-101 and given the 2020 Fiscal Year-End, the NBI ETF's auditor will be required to review the NBI ETFs' unaudited interim financial statements (i.e. as at June 30, 2020).

Filing of Documents

12. The Filer must file annual financial statements for the NBI ETFs for the 2020 Fiscal Year-End by no later than March 31, 2021, which date is after the Current Lapse Date.

13. Considering the time required by the auditors and resources to prepare the Prospectus documents commencing from the 2020 Fiscal Year-End, the Filer submits that it is unworkable to have the Prospectus documents, including the auditor's written consent, audited financial statements and auditor's report, by February 2, 2021.

14. As audited financial statements will not be ready by the Current Lapse Date, the NBI ETFs currently will need to incorporate by reference unaudited interim financial information (as at June 30, 2020) into the Prospectus documents. In order to incorporate by reference the interim unaudited financial statements into the Prospectus documents, those interim unaudited financial statements must be reviewed by the NBI ETFs' 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.

15. Given that the audited financial statements of the NBI ETFs will be available no later than March 31, 2021, which is only a few weeks following the filing of the Prospectus documents pursuant to the Current Lapse Date, this review of the interim unaudited financial statements will incur time and expenses which will only be relevant for a short period of time.

16. Extending the Current Lapse Date to April 23, 2021 will provide the time necessary for the NBI ETF's auditor to complete the audit of the NBI ETF's financial statements for the 2020 Fiscal Year-End and provide its written consent as required by Regulation 41-101, and enable the Filer to renew the Prospectus and ETF Facts on a timeline that allows the inclusion of the most current audited financial information each year. In doing so, it will be more efficient and remove unnecessary financial burden on the NBI ETFs which is indirectly borne by the NBI ETFs securityholders.

17. There have been no material changes in the affairs of the NBI ETFs since the Prospectus dated January 23, 2020. Accordingly, the Prospectus and ETF Facts continue to provide accurate information regarding the NBI ETFs. Given the disclosure obligations of the Filer and NBI ETFs, should any changes occur, the Prospectus and ETF Facts would be amended accordingly.

18. The Filer submits that the Exemption Sought will not affect the reliability and accuracy of the information contained in the Prospectus and is not contrary to the public interest.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted.

"Louis-Martin Ouellet"

Acting Director Investment Funds Oversight