Securities Law & Instruments


Extension of lapse date for mutual fund prospectus.

Statutes Cited

Securities Act, R.S.O. 1990 c. S.5, as amended, ss. 62(2) and 62(5).



R.S.O. 1990, c. S.5, AS AMENDED (the Act)




(the Fund)



(Subsection 62(5))

UPON an application from the Fund to the Ontario Securities Commission (the Commission) for an order pursuant to subsection 62(5) of the Act that the time periods referred to under subsection 62(2) of the Act be extended to the time periods that would be applicable if the lapse date for the distribution of securities of the Fund was December 17, 2003;

AND UPON the Fund having represented that:

1. The Fund is a labour sponsored investment fund (LSIF) which was incorporated under the Business Corporations Act (Ontario) by articles of incorporation dated September 26, 2002.

2. The Fund currently distributes Class A Shares, Series I and Class A Shares, Series II in Ontario pursuant to a prospectus dated November 29, 2002 (the Prospectus), as amended by a prospectus amendment dated October 28, 2003 (the Amendment).

3. The Fund is a reporting issuer as defined in the securities legislation of Ontario and is not in default of any of the requirements of such legislation.

4. The lapse date of the Prospectus under the Act is November 29, 2003.

5. Other than the proposed Acquisition (defined below), there have been no material changes in the affairs of the Fund since the filing of the Prospectus, as amended by the Amendment. Accordingly, the Prospectus and Amendment represent current information regarding the Fund.

6. On August 21, 2003, CI Fund Management Inc. (CI) entered into an agreement pursuant to which CI has agreed to purchase (the Acquisition) the business of Skylon Capital Corp. and VentureLink Capital Corp. The Acquisition closed on November 7, 2003.

7. The Fund is currently in the process of revising the Prospectus to include information about CI, the Acquisition and any new individuals that will act as directors and officers of the above-mentioned entities. As the Acquisition was very recently completed, Skylon Funds Management Inc. (Skylon), the manager of the Fund, will require additional time to revise the disclosure in the Prospectus to reflect the changes that will occur as a result of the Acquisition so that the disclosure in the renewal prospectus of the Fund (the Renewal Prospectus) is accurate, complete and in compliance with securities legislation.

8. In addition to changes to the Fund resulting from the Acquisition, in July 2003, the Canadian Institute of Chartered Accountants (the CICA) issued a new Handbook Section, Section 1100, which effectively changed the definition of generally accepted accounting practices (GAAP). The revised definition of GAAP indicates that accounting practices cannot be considered to comply with GAAP merely by virtue of their use in similar circumstances by a significant number of entities in Canada.

9. The Fund, and virtually all other LSIFs, have, to date, relied on industry practice to treat sales commissions as deferred charges and to account for them by adding them to the statement of net assets. The result of the changes proposed by the CICA to the definition of GAAP is that, for financial years beginning on or after October 1, 2003, the LSIF industry will no longer be able to treat the sales commissions paid by the LSIF as an asset on their statement of net assets.

10. Skylon, on behalf of each of the mutual funds in the VentureLink Capital family of funds, is currently in the process of examining and deciding on an alternative structure (the Alternative Structure) to deal with the CICA's new Handbook Section respecting the revised meaning of GAAP and the Commission's response to that change with respect to sales commissions. The requested lapse date extension would allow Skylon more time to make a reasoned decision and would allow for the Alternative Structure adopted to be described accurately in the Renewal Prospectus.

11. Skylon intends to submit a pro forma prospectus as soon as possible, but in any event no later than November 17, 2003 to provide the Commission with at least 30 days, as contemplated by subsection 62(2) of the Act, to review the changes to the Prospectus resulting from the Acquisition and the Alternative Structure.

12. If the relief requested herein is not granted, the Fund might be required to file a prospectus amendment in order to accurately describe details relating to the Acquisition and the Alternative Structure which are currently not finalized. The financial cost and time involved in producing and filing a prospectus amendment would be unduly costly.

13. The requested extension will not affect the accuracy of information in the Prospectus and therefore will not be prejudicial to the public interest.

AND UPON the undersigned being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to subsection 62(5) of the Act, that the time periods referred to in subsection 62(2) of the Act, as they apply to the distribution of securities under the Prospectus, are hereby extended as if the lapse date was December 17, 2003, provided that a Renewal Prospectus in respect of the Fund is filed by November 17, 2003.

November 13, 2003.

"Leslie Byberg"