The Securities Commission has approved an application for the merger of Ninepoint Concentrated Canadian Equity Fund (Terminating Fund) into Ninepoint Convertible Securities Fund (Continuing Fund), under the condition that unitholder approval is obtained. This decision was made under section 5.5(1)(b) of National Instrument 81-102 Investment Funds (NI 81-102), which governs investment fund mergers.
The merger required approval because it did not meet all the pre-approval criteria in section 5.6 of NI 81-102. Specifically, the investment objectives and fee structures of the two funds were not substantially similar, and the merger would not qualify as a tax-deferred exchange under the Income Tax Act (Canada).
The Terminating Fund aims to provide long-term capital appreciation through a concentrated portfolio of Canadian equity securities, while the Continuing Fund seeks to provide income and long-term capital appreciation by investing in convertible securities. Post-merger, Series F unitholders of the Terminating Fund will face a 0.5% higher management fee and an incentive fee in the Continuing Fund. The merger will be conducted on a taxable basis, with only 1% of the Terminating Fund’s unitholders expected to be in an unrealized gain position.
The Independent Review Committee (IRC) provided a positive recommendation for the merger, considering it fair and reasonable. Adequate disclosure was provided to the Terminating Fund’s unitholders, including tax implications, differences in investment objectives, fee structures, and the IRC’s recommendation.
The merger is anticipated to streamline product offerings, reduce administrative costs, potentially increase portfolio diversification, and offer unitholders flexibility and potential cost savings. The merger is expected to occur on or about March 19, 2021, with the Terminating Fund to be wound up within 60 days thereafter.
The decision was made by the Ontario Securities Commission, acting as the principal regulator, and is based on the application and representations made by Ninepoint Partners LP, the investment fund manager for both funds.