The Securities Commission has granted an exemption to Evermore Capital Inc. and its proposed exchange-traded mutual funds (ETFs) from certain regulatory requirements. The decision allows the ETFs to omit the underwriter’s certificate in their prospectus and exempts normal course purchases of ETF securities on a Canadian marketplace from take-over bid requirements.
Key points from the decision include:
1. The ETFs, managed by Evermore Capital Inc., will be structured as trusts or corporations and will be reporting issuers in the jurisdictions where their securities are distributed.
2. ETF securities will be listed on the NEO Exchange Inc. or another Canadian marketplace and will be distributed under a prospectus.
3. Authorized Dealers or Designated Brokers can subscribe for Creation Units directly from the ETFs, which are then traded on the marketplace.
4. The exemption from the underwriter’s certificate requirement is based on the fact that Authorized Dealers and Designated Brokers do not provide typical underwriting services, are not involved in prospectus preparation, and do not receive fees or commissions for distributing ETF securities.
5. The exemption from take-over bid requirements is justified because the structure of the ETFs prevents any shareholder from exercising control, the fluctuating number of outstanding ETF securities makes monitoring compliance challenging, and the pricing mechanism deters control attempts.
The decision is supported by the Securities Act (Ontario), National Instrument 62-104 Take-Over Bids and Issuer Bids, and other relevant securities legislation. The exemptions aim to facilitate the offering of exchange-traded mutual funds without compromising investor protection or market integrity.