True Exposure Investments, Inc. and TruX Exogenous Risk Pool
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 45-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).
January 13, 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 TRUE EXPOSURE INVESTMENTS, INC. (the Filer) AND IN THE MATTER OF TRUX EXOGENOUS RISK POOL (the Pool)
The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Pool for a decision under the securities legislation of the Jurisdiction (the Legislation) that extends the time limits for the renewal of the simplified prospectus and fund facts of the Pool to those time limits that would apply if the lapse date was February 28, 2023 (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 section 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, MI 11-102, and National Instrument 81- 102 Investment Funds (NI 81-102) 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 a corporation incorporated under the federal laws of Canada and has its head office in Toronto, Ontario.
2. The Filer is registered as an investment fund manager in the Provinces of Ontario, Quebec and Newfoundland and Labrador.
3. The Filer is the investment fund manager of the Pool.
4. Neither the Pool nor the Filer are in default of the securities legislation in any Jurisdiction.
5. The Pool is an open-ended mutual fund trust governed by a declaration of trust under the laws of the Province of Ontario. The Pool is a reporting issuer under the securities legislation of each of the Jurisdictions and is governed by the provisions of NI 81-102.
6. Securities of the Pool are currently distributed pursuant to a simplified prospectus and fund facts documents dated January 14, 2022, as amended from time to time (the Current Disclosure Documents). Accordingly, the lapse date is January 14, 2023. The Current Disclosure Documents represent the initial offering of securities of the Pool.
7. There have been no material changes in the affairs of the Pool since the filing of the Current Disclosure Documents, other than as described in the amendments to such documents dated February 22, 2022, March 30, 2022, May 25, 2022, and July 7, 2022. Accordingly, the Current Disclosure Documents represent current information regarding the Pool.
8. In order to be deemed to remain continuously qualified to distribute its securities in the Jurisdictions, the Pool is:
a. Required by sections 62(2)(a) and 62(2)(b) of the Securities Act (Ontario) (the OSA) and sections 2.5(4)(a) and 2.5(4)(b) of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) to file a pro forma version of a renewal prospectus by no later than December 15, 2022, and a final version of a renewal prospectus by no later than January 24, 2023; and
b. Required by sections 62(2)(c) of the OSA and 2.5(4)(c) of NI 81-101 to receive a receipt for the final version of the renewal prospectus by no later than February 3, 2023.
The Pool filed its pro forma renewal simplified prospectus and fund facts documents on December 14, 2022.
9. The financial year end of the Pool is December 31. Semi-annual financial statements and an interim management report of fund performance (MRFP) for the Pool (collectively, the Interim Financial Reports) were prepared as of June 30, 2022 and filed in accordance with regulatory requirements. As permitted by section 2.12 of National Instrument 81-106 Investment Fund Continuous Disclosure, the Interim Financial Reports were not reviewed by the Pool's auditor.
10. The Filer expects the audited annual financial statements and annual MRFP of the Pool to be ready for filing in the first week of February, 2023.
11. The consent of the Pool's auditor is required to file a final simplified prospectus for the Pool. This consent must also cover documents incorporated by reference into the simplified prospectus, which includes the most recent annual financial statements and MRFP of the Pool and any interim financial statements and interim MRFP filed since the annual financial statements and MRFP were filed. The auditor cannot consent to the inclusion of a financial report that has not been audited or reviewed. The Filer submits that the Exemption Sought would permit a more efficient use of the Pool's resources.
12. Form 81-101F3 requires that the MER of the Pool be that included on the last set of financial reports. The Filer submits that including the MER from the more recent annual financial reporting would represent the better disclosure.
13. Given the disclosure obligations of the Pool, should a material change in the affairs of the Pool occur, the simplified prospectus and fund facts documents of the Pool will be amended as required under the Legislation.
14. The Exemption Sought will not affect the accuracy of the information contained in the simplified prospectus and fund facts documents of the Pool 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.