National Policy 11-203 Process for Exemptive Relief in Multiple Jurisdictions – Relief granted to scholarship plan for extension of prospectus lapse date – Additional time needed to consider impact of certain proposed changes to operational practices on disclosure – Extension of lapse date will not impact currency of disclosure relating to the funds.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 62(2), 62(5).
November 15, 2018
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
CHILDREN’S EDUCATION FUNDS INC.
THE CHILDREN’S EDUCATION TRUST OF CANADA,
GROUP OPTION PLAN,
SELF INITIATED PLAN AND
(each, a Plan, and collectively, the Plans)
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption that the time limits pertaining to filing the renewal prospectus of the Plans be extended as if the lapse date of the Plans’ prospectus dated November 6, 2017 (the Current Prospectus) is February 6, 2019 (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (OSC) 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 British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, Yukon, Northwest Territories, and Nunavut (together with the Jurisdiction, the Jurisdictions).
Terms defined in National Instrument 14-101 Definitions and MI 11-102 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 Business Corporations Act (Ontario).
2. The Filer is registered as a scholarship plan dealer applicable securities legislation in each of the Jurisdictions. The Filer is also registered as an investment fund manager under applicable securities legislation in Newfoundland and Labrador, Ontario and Quebec.
3. Each Plan is an “Education Savings Plan” under s. 146.1 of the Income Tax Act (Canada). The Plans are currently administered by the Filer which is also the investment fund manager of the Plans.
4. Each Plan is a reporting issuer in each of the Jurisdictions.
5. Securities of the Plans are currently qualified for distribution in each of the Jurisdictions under the Current Prospectus and the Plans are reporting issuers under the laws of each of the provinces and territories of Canada.
6. None of the Plans, nor the Filer, is in default of securities legislation in any of the Jurisdictions.
7. The lapse date of the Current Prospectus is November 6, 2018 (the Current Lapse Date). Under the Legislation, the distribution of the securities of each Plan would have to cease on the Current Lapse Date unless: (a) each Plan files a pro forma prospectus at least 30 day prior to the Current Lapse Date, (b) the final prospectus is filed no later than 10 days after the Current Lapse Date; and (c) a receipt for the final prospectus is obtained within 20 days of the Current Lapse Date.
8. A pro forma prospectus for the Plans was filed on October 9, 2018 in connection with the continuous public offering of the securities of each Plan. Accordingly, without the Exemption Sought, the final prospectus for the Plans would have to be filed by November 16, 2018 and a receipt must be obtained by November 26, 2018 in order for the distribution of securities of the Plans to continue without interruption.
9. Given the anticipated timing of the completion of discussions between the Filer and the OSC regarding proposed changes to the Filer’s operational and allocation practices affecting the Plans, the relevant disclosure in the final prospectus cannot be finalized prior to the current lapse date. The Exemption Sought is requested in order to allow sufficient time to finalize this disclosure without resulting in the Plans being forced to cease distribution of their securities because the Current Prospectus has lapsed.
10. Since the date of the Current Prospectus, there has been no undisclosed material change in the Plans. Accordingly, the Current Prospectus continues to provide accurate information regarding the Plans.
11. Should any material changes be proposed in the interim, the Plans’ prospectus will be amended accordingly. Therefore, the Exemption Sought will not affect the currency or accuracy of the information contained in the Current Prospectus, and therefore will 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.
Manager, Investment Funds & Structured Products Branch
Ontario Securities Commission