The Securities Commission has granted approval for a fund reorganization involving Mackenzie Financial Corporation (the Filer) and associated funds, subject to certain conditions. The reorganization involves the Mackenzie Global Resource Fund (Reorganizing Fund) and the Canada Life Global Resources Fund (Canada Life Fund), with the latter expected to receive unitholders from the former in a tax-deferred manner. The reorganization does not meet all pre-approval criteria of National Instrument 81-102 Investment Funds (NI 81-102), specifically regarding qualifying exchanges under the Income Tax Act (Canada) (Tax Act), the wind-up of the Reorganizing Fund, and the provision of a fund facts document to unitholders prior to approval.
The Filer sought two main forms of relief: (i) approval for the reorganization despite not meeting all pre-approval criteria, and (ii) an exemption to allow top funds managed by the Filer or its affiliates to invest in the Reorganizing Fund or Canada Life Fund, which may hold more than 10% of their net asset value (NAV) in securities of a fund established for tax deferral purposes post-reorganization (the LP Fund).
The Commission approved the reorganization, provided that unitholder approval is obtained, and granted the exemption for the top funds to invest in the Reorganizing Fund or Canada Life Fund under a three-tier structure, subject to conditions that ensure compliance with investment objectives, disclosure requirements, and avoidance of fee duplication.
The decision is based on the understanding that the reorganization will be a non-taxable event for unitholders, will not have a material impact on non-affected unitholders, and will not result in fee duplication. The Independent Review Committee (IRC) has determined that the reorganization is fair and reasonable. The reorganization is expected to occur on or about September 17, 2021, with the Filer and Canada Life Investment Management Ltd. (CLIML) covering the costs.
The decision is grounded in sections 2.1(1), 2.5(2)(b), 5.5(1)(b), 5.6(1), and 19.1(2) of NI 81-102, as well as relevant provisions of the Tax Act and securities legislation of Ontario and other Canadian jurisdictions.