The Securities Commission has granted an exemption to a financial management company, allowing it to consolidate the simplified prospectus (SP) of an alternative mutual fund with the SP of a conventional mutual fund. This decision is based on the provisions of National Instrument 81-101 Mutual Fund Prospectus Disclosure, specifically subsections 5.1(4) and 6.1(1), which generally prohibit such consolidation unless an exemption is granted.
The key reasons for granting the exemption include the desire to reduce renewal, printing, and related costs, and to facilitate the distribution of alternative funds alongside conventional funds under the same prospectus disclosure. This consolidation is expected to enable investors to more easily compare features between the two types of funds. The decision also notes that the operational and administrative features of the alternative and conventional funds are similar, which supports the rationale for combining their prospectuses.
The exemption will not alter the form and content of the fund facts and ETF facts documents required by securities legislation, and these will continue to be provided to investors as mandated. The decision also references the lack of a similar prohibition in National Instrument 41-101 General Prospectus Requirements for exchange-traded funds (ETFs), suggesting that mutual funds should not be treated differently.
The Ontario Securities Commission, acting as the principal regulator, has concluded that the exemption meets the necessary legislative criteria and has therefore granted the requested relief. The exemption applies across multiple Canadian jurisdictions where the financial management company operates and is registered.