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IA Clarington Investments Inc. and Investia Financial Services Inc

2022-06-14 | Decision | 81-101 | Investment funds and structured products | https://www.osc.ca/en/securities-law/orders-rulings-decisions/ia-clarington-investments-inc-and-investia-financial-services-inc

National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 3.2.01 and 6.1.


The Securities Commission granted an exemption to a mutual fund manager (the Filer) from the requirement to deliver a fund facts document to investors upon automatic switches of mutual fund securities. This exemption applies when investors are switched from series initially sold under deferred sales charge options to series with equal or lower combined management and administration fees after a minimum holding period.

The exemption is contingent on compliance with certain disclosure and notification requirements. The Filer must inform investors about the automatic switches, the lack of delivery of the fund facts document, and provide details on how to obtain the document if desired. Additionally, the Filer must disclose the trailing commission rates and confirm that no additional fees are charged for the automatic switch.

The decision is based on the rationale that investors will not experience material changes in their investment except for potential lower fees, and they have already received a simplified prospectus or fund facts document disclosing higher fees for the series initially subscribed to.

The exemption is supported by National Instrument 81-101 Mutual Fund Prospectus Disclosure, specifically section 3.2.01, which requires the delivery of the fund facts document before the purchase of mutual fund securities, and section 6.1, which allows for exemptions.

The decision was made in accordance with the securities legislation of Quebec and Ontario and under the Process for Exemptive Relief Applications in Multiple Jurisdictions. The Autorité des marchés financiers is the principal regulator, and the decision also applies to Ontario.