The Securities Commission approved a mutual fund merger between CI Galaxy Bitcoin Fund (Terminating Fund) and CI Galaxy Bitcoin ETF (Continuing Fund). The merger required approval as it did not meet the criteria for pre-approved reorganizations and transfers in National Instrument 81-102 Investment Funds (NI 81-102) due to its taxable nature. The merger complied with other pre-approval criteria, including securityholder vote and Independent Review Committee (IRC) approval, and provided adequate disclosure to securityholders.
Key points include:
– The merger will occur on a taxable basis, with no tax impact to unitholders holding the fund in a registered plan.
– The Terminating Fund’s unitholders approved the merger at a special meeting.
– The merger was not considered a material change for the Continuing Fund, and thus no unitholder meeting was required for it.
– The merger was intended to provide benefits such as better market price alignment with net asset value, potential economies of scale, and uniform management fees.
– The costs of the merger were to be borne by the Manager, with no sales charges for the Terminating Fund’s unitholders.
– The merger was scheduled to occur after the close of business on or about May 7, 2021, with the Terminating Fund to be wound up promptly thereafter.
The decision was made under the authority of sections 5.5(1)(b) and 19.1(2) of NI 81-102 and was consistent with the test set out in the Legislation for the principal regulator to make the decision.