Purpose Investments Inc. et al.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted to mutual fund trusts for extensions of lapse dates of their prospectuses, annual information forms, fund facts, and ETF Facts -- Filer will incorporate offering of the funds under the same offering documents when they are renewed -- Extensions of lapse dates will not affect the currency or accuracy of the information contained in the current prospectuses or other fund documents -- Relief granted under subsection 62(5) of the Securities Act to permit the extension of 70 and 72 days.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).
June 28, 2021
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 PURPOSE INVESTMENTS INC. (the Filer) AND MLD CORE FUND, PURPOSE FLOATING RATE INCOME FUND AND PURPOSE GOLD BULLION FUND (the Extended Funds)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Extended Funds for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the respective time limits for the renewal of the simplified prospectus of Purpose Gold Bullion Fund dated July 16, 2020 (the Gold Prospectus), and the combined simplified prospectus of Purpose Floating Rate Income Fund and MLD Core Fund dated July 13, 2020 (the Floating Rate and MLD Prospectus and together with the Gold Prospectus, the Prospectuses) be extended to those time limits that would apply if the lapse date of each Prospectus were September 25, 2021 (the Exemption Sought).
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 British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Quebec, Prince Edward Island, Northwest Territories, Nunavut, and Yukon (together with Ontario, the Canadian 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 amalgamated under the laws of Ontario. The Filer's head office is located in Toronto, Ontario.
2. The Filer currently is registered under the securities legislation in:
(a) Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan in the categories of investment fund manager and exempt market dealer;
(b) British Columbia, Ontario and Québec in the category of portfolio manager; and
(c) Ontario as a commodity trading manager.
3. The Filer is the investment fund manager of the Funds.
4. Each Fund is an open-ended mutual fund trust established under the laws of Ontario. The Funds are each reporting issuers as defined in the securities legislation of each of the Canadian Jurisdictions.
5. Neither the Filer nor the Extended Funds are in default of securities legislation in any of the Canadian Jurisdictions.
6. Purpose Floating Rate Income Fund and MLD Core Fund currently distribute their securities in the Canadian Jurisdictions under the Floating Rate and MLD Prospectus.
7. Purpose Gold Bullion Fund currently distributes securities in the Canadian Jurisdictions under the Gold Prospectus.
8. PK Core Fund (and collectively with Purpose Floating Rate Income Fund, MLD Core Fund and Purpose Gold Bullion Fund, the Funds) currently distributes securities in the Canadian Jurisdictions under a simplified prospectus dated September 25, 2020 (the PK Prospectus and collectively with the Prospectuses, the Current Prospectuses).
9. Pursuant to subsection 62(1) of the Securities Act (the Act), the lapse date of the Floating Rate and MLD Prospectus is July 13, 2021 (the Floating Rate and MLD Lapse Date). Accordingly, under subsection 62(2) of the Act, the distribution of securities of each of Purpose Floating Rate Income Fund and MLD Core Fund would have to cease on the Floating Rate and MLD Lapse Date unless: (i) Purpose Floating Rate Income Fund and MLD Core Fund each file a pro forma simplified prospectus at least 30 days prior to the Floating Rate and MLD Lapse Date; (ii) the final simplified prospectus is filed no later than 10 days after the Floating Rate and MLD Lapse Date; and (iii) a receipt for the final simplified prospectus is obtained within 20 days of the Floating Rate and MLD Lapse Date.
10. Without the Exemption Sought, the renewal prospectus relating to Purpose Floating Rate Income Fund and MLD Core Fund is therefore required to be filed by June 14, 2021 (the Floating Rate and MLD Pro Forma Deadline) in order for securities of each of Purpose Floating Rate Income Fund and MLD Core Fund to continue to be distributed after the Floating Rate and MLD Lapse Date.
11. Pursuant to subsection 62(1) of the Act, the lapse date of the Gold Prospectus is July 16, 2021 (the Gold Lapse Date). Accordingly, under subsection 62(2) of the Act, the distribution of securities of Purpose Gold Bullion Fund would have to cease on the Gold Lapse Date unless: (i) Purpose Gold Bullion Fund files a pro forma simplified prospectus at least 30 days prior to the Gold Lapse Date; (ii) the final simplified prospectus is filed no later than 10 days after the Gold Lapse Date; and (iii) a receipt for the final simplified prospectus is obtained within 20 days of the Gold Lapse Date.
12. Without the Exemption Sought, the renewal prospectus relating Purpose Gold Bullion Fund is therefore required to be filed by June 16, 2021 (the Gold Pro Forma Deadline) in order for securities of Purpose Gold Bullion Fund to continue to be distributed after the Gold Lapse Date.
13. Pursuant to subsection 62(1) of the Act, the lapse date of the PK Prospectus is September 25, 2021 (the PK Lapse Date).
14. The Filer wishes to combine the Current Prospectuses into a single prospectus in order to reduce renewal, printing and related costs. In addition, the Filer is considering adding additional, new, funds to such single prospectus (the New Funds). The terms of such New Funds have not been finalized. In order to create a single prospectus, renewal documentation and disclosure relating to the Funds and the New Funds will need to be finalized, combined and translated.
15. Offering the Funds and the New Funds under one prospectus would facilitate the distribution of the Funds and the New Funds in the Canadian Jurisdictions under the same prospectus and enable the Filer to streamline disclosure across the Filer's fund platform. As the Funds are managed by the Filer, are established under the same declaration of trust, and share a number of common features, offering them under the same prospectus will allow investors to more easily compare their features. The New Funds will also be established under the same declaration of trust and will share a number of common features as the Funds.
16. The process being undertaken by the Filer to combine the Current Prospectuses (and to include disclosure relating to the New Funds) into one prospectus requires additional time in order to properly update and streamline and translate the disclosure of the Funds. Given the time required to perform these tasks accurately, the Filer does not have sufficient time to finalize and file the preliminary and pro forma prospectus combining the Funds and the New Funds by the Floating Rate and MLD Pro Forma Deadline or the Gold Pro Forma Deadline.
17. In addition, the Filer submits that it is impractical to alter and modify all the dedicated systems, procedures and resources required to prepare the renewal simplified prospectuses, annual information forms, fund facts and ETF Facts documents of all the Funds, and unreasonable to incur the costs and expenses associated therewith, so that the pro forma renewal documentation of the Funds could be filed on by the earliest date required, being the Floating Rate and MLD Pro Forma Deadline. In addition, the terms of the New Funds have not been finalized and therefore including in a combined pro forma and preliminary prospectus would not be possible if such combined pro forma and preliminary prospectus was required to be filed by the Floating Rate and MLD Pro Forma Deadline.
18. Providing an extension for the Floating Rate and MLD Lapse Date and the Gold Lapse Date will permit the Funds to be combined into one prospectus, translation requirements to be completed and the New Funds to be included. The Exemption Sought seeks an extension of the Floating Rate and MLD Lapse Date and the Gold Lapse Date such that the lapse dates of the Extended Funds correspond to the PK Lapse Date.
19. There have been no material changes in the affairs in any of the Extended Funds since the dates of the Current Prospectuses. Accordingly, the Current Prospectuses, annual information forms,current fund facts and ETF Facts documents of the Extended Funds represent current information regarding the Extended Funds.
20. Given the disclosure obligations of the Funds, should a material change in the affairs of the Extended Funds occur, the Current Prospectuses, annual information forms and current fund facts/ETF Facts documents of the Extended Funds will be amended as required under applicable legislation.
21. New investors in the Extended Funds will receive delivery of the most recently filed fund facts or ETF Facts documents of the Extended Funds, as applicable. The Current Prospectuses will still be available upon request.
22. The Exemption Sought will not affect the accuracy of the information contained in the Current Prospectuses, annual information forms or the respectively filed fund facts or ETF Facts documents of the Extended Funds, 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 Exemption Sought is granted.
Application File #:2021/0340