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Caldwell Investment Management Ltd. et al.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted to mutual funds for extension of lapse date of their prospectus -- 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).
May 30, 2018
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 CALDWELL INVESTMENT MANAGEMENT LTD. (the Filer) AND IN THE MATTER OF CALDWELL INCOME FUND, CALDWELL BALANCED FUND, CALDWELL CANADIAN VALUE MOMENTUM FUND (each, a Fund and, 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 time limits for the renewal of the simplified prospectus of the Funds dated July 20, 2017 be extended to those time limits that would apply if the lapse date was August 20, 2018 (the Requested Relief).
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 sub-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 except for Quebec (together with Ontario, the Jurisdictions).
Interpretation
Defined terms contained 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. Filer is a corporation existing under the laws of Ontario. The Filer's head office is located in Toronto, Ontario.
2. The Filer is registered as a portfolio manager and investment fund manager in Alberta, British Columbia, Manitoba, Ontario, Quebec and Saskatchewan.
3. Each Fund is a mutual fund trust governed by the laws of the Province of Ontario and is a reporting issuer as defined in the securities legislation of each of the Jurisdictions.
4. Neither the Filer nor any of the Funds are in default of securities legislation in any of the Jurisdictions.
5. Each Fund currently distributes its securities in the Jurisdictions pursuant to a simplified prospectus dated July 20, 2017 as amended in respect of the Caldwell Canadian Value Momentum Fund by amendment no. 1 dated September 29, 2017, an annual information form dated July 20, 2017 as amended in respect of the Caldwell Canadian Value Momentum Fund by amendment no. 1 dated September 29, 2017, fund facts documents dated July 20, 2017 for each series of the Funds except for Series F and Series O of the Caldwell Canadian Value Momentum Fund, and fund facts documents dated September 29, 2017 for Series F and Series O of the Caldwell Canadian Value Momentum Fund (collectively, the Current Prospectus).
6. The lapse date of the Current Prospectus under the Legislation is July 20, 2018 (the Current Lapse Date). Accordingly, under the Legislation, the distribution of securities of the Fund would have to cease on the Current Lapse Date unless: (i) the Fund files a pro forma simplified prospectus at least 30 days prior to the Current Lapse Date, being June 20, 2018 (the "Current Pro Forma Date"); (ii) the final simplified prospectus is filed no later than 10 days after the Current Lapse Date, being July 30, 2018 (the "Current Final Filing Date"); and (iii) a receipt for the final simplified prospectus is obtained within 20 days after the Current Lapse Date.
7. The Filer is the manager and trustee of the Funds.
8. The Filer intends to call a meeting (the Meeting) of unitholders of the Caldwell Income Fund (the Income Fund) on or about the second week of July, 2018, to seek unitholder approval for certain proposed changes to the Income Fund including changes to the fundamental investment objective of the Income Fund.
9. The Filer will issue a press release and will file a material change report and an amendment to the Current Prospectus of the Funds (the Amendment) at the same time that the notice of the Meeting is sent to unitholders. The Amendment will describe the matters to be considered at the Meeting and will disclose that the Filer has applied for the Requested Relief.
10. The Meeting is scheduled to take place after the Current Pro Forma Date of June 20, 2018. The Requested Relief would allow the Filer to file the 2018 pro forma renewal prospectus of the Funds (the 2018 Pro Forma Prospectus) by July 20, 2018, after the voting results of the Meeting become known.
11. The Requested Relief will enable the Filer to submit a 2018 Pro Forma Prospectus that reflects current information on the Funds, including the results of the Meeting. In the absence of the Requested Relief, the Manager would be required to file the 2018 Pro Forma Prospectus prior to the Meetings, which might require significant changes after the securities regulators had already reviewed and commented on the 2018 Pro Forma Prospectus.
12. As a result, in the absence of the Requested Relief, the Filer would likely have insufficient time to revise the 2018 Pro Forma Prospectus to reflect the outcome of the Meeting and respond to and address all regulatory comments in connection therewith prior to the Current Final Filing Date of July 30, 2018. As a result, in the absence of the Requested Relief, the Filer would likely need to prepare and file an amendment to the 2018 final simplified prospectus, annual information form and fund facts of the Funds (the 2018 Final) only days after a receipt would have been issued in respect of the 2018 Final. The costs and expenses the Funds would bear in connection with preparing and filing such an amendment would be unreasonable and unduly costly and would offer little if any corresponding benefits to unitholders.
13. There have been no material changes in the affairs of the Funds since the date of the Current Prospectus, other than those for which amendments have been filed. Accordingly, the Current Prospectus and the most recently filed fund facts documents of the Funds represent the current information of the Funds.
14. Given the disclosure obligation of the Funds, should any material changes occur, the Current Prospectus of the Funds will be amended as required under the Legislation.
15. New investors of the Funds will receive delivery of the most recently filed fund facts of the Funds. The Current Prospectus of the Funds will still be available upon request.
16. The Requested Relief will not affect the accuracy of the information contained in the Current Prospectus 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 Requested Relief is granted.
"Stephen Paglia"
Manager, Investment Funds and Structured Products Branch
Ontario Securities Commission